DAR ES SALAAM STOCK EXCHANGE
BLUE PRINT
PREPARED BY
THE COUNCIL OF THE
DAR ES SALAAM STOCK EXCHANGE
REVISED MARCH 2011
1
TABLE OF CONTENTS
CHAPTER ONE
INTERPRETATIONS AND DEFINITIONS
CHAPTER TWO
ROLES, FUNCTIONS AND ORGANIZATION STRUCTURE OF THE DAR ES SALAAM STOCK
EXCHANGE
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
Roles, Functions and Organization Structure of the Dar es Salaam Stock Exchange……. 15
Roles of the DSE……………………………………………………………………………………..15
Functions of the Dar es Salaam Stock Exchange…………………………………………….. 16
Organization Structure of the Dar es Salaam Stock Exchange (DSE)………………………. 17
Subscribers to the Memorandum and Articles of Association of the DSE………………….. 17
The Council………………………………………………………………………………………… 17
Management………………………………………………………………………………………. 18
Urgent Actions……………………………………………………………………………………. 21
CHAPTER THREE
MEMBERSHIP TO THE EXCHANGE
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
3.21
3.22
3.23
3.24
3.25
General………………………………………………………………………………………………. 22
Membership, Discipline and Financial Business Conduct……………………………………….22
Application Procedures for Associate Members………………………………………………… 23
Termination…………………………………………………………………………………………. 24
Licensed Dealing Membership…………………………………………………………………… 24
Application Procedure for LDMS………………………………………………………………… 24
Expulsion……………………………………………………………………………………………. 25
Liability of Directors and Officers………………………………………………………………… 25
Incapacity………………………………………………………………………………………….. 26
Company Name and Address……………………………………………………………………… 26
A LDM may register more than one business address………………………………………. 26
advance notice of commencement, temporary suspension, cessation and commencement
of business to the Council………………………………………………………………………… 26
LDM responsibility for all acts done or contracts committed by its directors, employees
or agents …………………………………………………………………………………………… 26
LDM to Keep records and accounts of its business of dealing in securities………………… 27
disciplinary procedures…………………………………………………………………………… 27
Disciplinary Measures……………………………………………………………………………… 28
Disciplinary proceeding against a former LDM ……………………………………………….. 28
Notification to the Public…………………………………………………………………………… 28
Fines………………………………………………………………………………………………… 29
Suspension for Non-Payment of Fine…………………………………………………………… 29
Disputes between Members……………………………………………………………………… 29
Financial, Accounting and Business Conduct…………………………………………………… 29
Nominee Accounts………………………………………………………………………………… 30
Particulars of Clients……………………………………………………………………………… 31
Contract Notes…………………………………………………………………………………… 31
2
3.26
3.27
3.28
3.29
3.30
3.31
3.32
3.33
3.34
3.35
3.36
3.37
3.38
3.39
3.40
3.41
Statements of Account to Discretionary Clients………………………………………………..
Brokerage ………………………………………………………………………………………….
Transfers…………………………………………………………………………………………..
Fees Payable With Respect To Private Transfers…………………………………………….
Clearing Fees……………………………………………………………………………………..
Payment to Client…………………………………………………………………………………
Discretionary Account…………………………………………………………………………….
Prohibition on Credit to Clients…………………………………………………………………..
Exposure to a Single Security……………………………………………………………………
Maintain records by LDM details of particulars ……………………………………………….
Trust Accounts……………………………………………………………………………………
Circumstances under which Money can be withdrawn from Trust Accounts……………..
Annual Accounts…………………………………………………………………………………
Quarterly Returns………………………………………………………………………………..
Net Capital and Aggregate Indebtedness…………………………………………………….
Code of Business Conduct…………………………………………………………………….
32
32
32
33
33
33
33
34
34
34
35
35
36
36
36
36
CHAPTER FOUR
LISTING RULES FOR THE MAIN INVESTMENT MARKET SEGMENT
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
General……………………………………………………………………………………………. 39
Procedure………………………………………………………………………………………….. 39
Basic Conditions to Be Fulfilled by an Applicant………………………………………………… 42
Listing of Preference Shares………………………………………………………………………. 46
Provisions Relating to Prospectuses…………………………………………………………… 47
Other Requirements………………………………………………………………………………… 47
Admission to Listing……………………………………………………………………………….. 48
Listing on Other Stock Exchanges………………………………………………………………… 48
Suspension and Cancellation of Listing………………………………………………………….. 48
CHAPTER FIVE
LISTING RULES FOR THE ENTERPRISE GROWTH MARKET SEGMENT (EGMs)
5.0
5.1
5.2
5.3
5.4
5.5
Preliminary………………………………………………………………………………………….
Approval of a Prospectus ………………………………………………………………………….
Approval of the Council…………………………………………………………………………….
Sponsorship of Application for Listing…………………………………………………………….
Application for Listing………………………………………………………………………………
Documents to be submitted with an Application for Listing……………………………………
50
50
50
50
52
52
5.6
Basic Conditions to Be Fulfilled by an Applicant………………………………………………
53
5.7
5.8
5.9
5.10
5.11
5.12
5.13
Listing of Preference Shares……………………………………………………………………
Provisions Relating to Prospectuses ………………………………………………………….
Other Requirements………………………………………………………………………………
Admission to Listing ………………………………………………………………………………
Continuing Obligations……………………………………………………………………………
Listing on Other Stock Exchanges ……………………………………………………………
Suspension and Cancellation of Listing .………………………………………..
57
58
59
59
59
59
60
3
5.14
Referrals…………………………………………………………………………………………
60
CHAPTER SIX
LISTING RULES FOR DEBT SECURITIES
6.0
6.1
6.2
6.3
Basic Conditions to be fulfilled by an Applicant……………………………………………..
Additional Information ……………………………………………………………………………
Listing of Loan Securities………………………………………………………………………..
Minimum Value of Securities to Be Listed………………………………………………………
62
62
62
67
CHAPTER SEVEN
TRADING RULES
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
7.16
7.17
7.18
7.19
7.20
7.21
7.22
7.23
7.24
7.25
7.26
7.27
7.28
7.29
7.30
7.31
7.32
7.33
7.34
7.35
7.36
General Conditions……………………………………………………………………………… 68
Ownership of Securities…………………………………………………………………………. 69
Functions of the LDM…………………………………………………………………………….. 69
Short Selling……………………………………………………………………………………….. 70
Duties to the Client…………………………………………………………………………………. 70
Disputes and Irregular Deals………………………………………………………………………. 70
Trading Delays and Halts………………………………………………………………………… 71
“Firm Orders "My Order Is My Bond"……………………………………………………………… 71
System Failure……………………………………………………………………………………… 71
Records and Reports……………………………………………………………………
71
Trading Procedures ……………………………………………………………………………… 71
Attendance at Trading Sessions………………………………………………………………… 72
Persons Permitted To Deal………………………………………………………………………… 72
Trading as Principal………………………………………………………………………………… 72
Definition of Orders………………………………………………………………………………… 73
Validity of Bids and Offers……………………………………………………………………… 73
Tick Sizes and Trade Ranges……………………………………………………………………… 73
Minimum Lot Size…………………………………………………………………………………… 73
Spreads (Ticks)……………………………………………………………………………………… 74
Division of Market…………………………………………………………………………………… 74
Odd Lots……………………………………………………………………………………………… 74
Block Trades………………………………………………………………………………………… 74
Pre-Arranged Trades……………………………………………………………………………..... 74
Block Trades Exceeding Market Capacity………………………………………………………... 75
Placing Orders ……………………………………………………………………………………… 76
Trading Phases……………………………………………………………………………………… 76
Pre-Open…………………………………………………………………………………………… 76
Open Auction……………………………………………………………………………………… 77
Regular Trading…………………………………………………………………………………… 79
Entering Orders……………………………………………………………………………………… 81
Order Log Book……………………………………………………………………………………… 82
Types of Orders………………………………………………………………………………………82
Limit Orders………………………………………………………………………………………… 82
Market Orders……………………………………………………………………………………… 82
Touchline…………………………………………………………………………………………… 83
Tick Sizes and Touchlines………………………………………………………………………… 84
4
7.37
7.38
7.39
7.40
7.41
7.42
7.43
7.44
7.45
7.46
7.47
7.48
7.49
7.50
7.51
7.52
7.53
7.54
7.55
7.56
7.57
7.58
7.59
7.60
7.61
7.62
Disclosed and Undisclosed Volumes…………………………………………………………… 84
Protection Price…………………………………………………………………………………… 85
Order Attributes…………………………………………………………………………………… 86.
Order Qualifiers……………………………………………………………………………………… 86
Minimum Fill Quantity………………………………………………………………………………. 87
Disclosed Quantity………………………………………………………………………………… 87
Alteration of Orders (Change Former Order – CFO)………………………………………… 88
Cancellation of Orders…………………………………………………………………………… 88
Priority of Orders for Execution – Queue Priority……………………………………………… 88
Order Validation…………………………………………………………………………………… 89
Validity of Bids and Offers……………………………………………………………………… 90
Lot Sizes…………………………………………………………………………………………… 91
Order Execution…………………………………………………………………………………
91
New Issues Price Discovery……………………………………………………………………… 91
Odd Lot Transactions……………………………………………………………………………… 91
Block Trades………………………………………………………………………………………… 92
Amendment/Cancellation of Orders………………………………………………………………. 95
Trade Cancellation………………………………………………………………………………….. 96
Market Close………………………………………………………………………………………… 96
Closing Price……………………………………………………………………………………… 96
Dissemination of Market Information…………………………………………………………….. 96
Trading Halts………………………………………………………………………………………… 97
Contract Notes………………………………………………………………………………………. 97
Depository Updates………………………………………………………………………………… 98
Holding Query……………………………………………………………………………………….. 98
Bonds Trading Rules……………………………………………………………………………… 98
CHAPTER EIGHT
CUSTODY OF SECURITIES AT THE DAR ES SALAAM STOCK EXCHANGE
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
8.12
8.13
8.14
8.15
8.16
8.17
8.18
8.19
General………………………………………………………………………………….……….…
Nature of Interest in CDS Accounts………………………………………….…………….……
Structure Of the CDS Accounts………………………………………………………………..…
Criteria for Admission Of CDS Operators ………………………………………………..…..…
Basic Information in the Accounts…………………………………………………………..……
Non Listed Securities CDS Operators……………………………………………………...……
Confidentiality……………………………………………………………………………….………
Ledger Balance Report………………………………………………………………………….…
Register of Securities Holders………………………………………………………………….…
Safe Keeping of Securities/Documents at the DSE…………………………………..…………
Schedule Of DSE CDS Events……………………………………………………………………
Authorised Signatories………………………………………………………………….…………
Opening Central Depository Accounts at the DSE……………………………….……………
Account Opening Procedures………………………………………………………….…………
Deposit of Securities into the CDS During IPOs……………………………………………….
Steps Involved in Processing a Sell and a Buy Order..........................................................
Execution of a Sell Order………………………………………………………………………..…
Initial of a Purchase Order…………………………………………………………………………
Execution of a Purchase Order……………………………………………………
119
5
102
102
102
103
107
109
112
112
112
113
113
114
114
115
116
117
118
118
8.20
8.21
8.22
8.23
Effecting Transfer of Ownership of Securities Through the CDS……………………
Withdrawing Certificates from the CDS ………………………………………………
Mortgaging of Securities…………………………………………………………………
Settlement of DSE Trades………………………………………………………………
119
120
121
123
CHAPTER NINE
DAR ES SALAAM STOCK EXCHANGE (LISTING OF FOREIGN COMPANIES) RULES, 2003
9.0
9.1
9.2
9.3
9.4
Interpretation……………………………………………………………………………… 129
Cross Listing of Securities……………………………………………………………… 129
Cross Listing Fee………………………………………………………………………… 130
Continuing Listing Requirements…………………………………………………………130
Transactions In Cross Listed Securities………………………………………………… 130
CHAPTER TEN
DAR ES SALAAM STOCK EXCHANGE (FOREIGN INVESTORS)
RULES, 2003
10.0
10.1
10.2
10.3
Interpretation……………………………………………………………………………… 131
Permission for Investment by Foreign Investors……………………………………… 131
Appointment of Custodian……………………………………………………………… 131
Deposit of Certificates (Securities) Into the Central Depository System…………… 132
11.0
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
11.9
11.10
11.11
11.12
11.13
CHAPTER ELEVEN
INVESTOR PROTECTION
FIDELITY FUND
Preliminary………………………………………………………………………………… 133
Claims……………………………………………………………………………………… 133
Declaration of Default…………………………………………………………………… 133
Default Notice …………………………………………………………………………… 134
Application for Compensation ……………………………………………………… 134
Exclusion from Compensation………………………………………………………… 134
Limit of Compensation………………………………………………………………… 135
Reduced or Interim Payments………………………………………………………… 135
Assignment of Rights …………………………………………………………………… 135
Powers of the Council…………………………………………………………………… 135
Revenue of the Fund…………………………………………………………………… 136
Payment out of the Fund ………………………………………………………………… 136
Records …………………………………………………………………………………… 136
Cooperation with the Council and Disciplinary Committee………………………… 136
12.0
12.1
12.2
12.3
12.4
12.5
CHAPTER TWELVE
SECURITIES MARKET INDICES
Introduction………………………………………………………………………………
Definition…………………………………………………………………………………
Benefits of Securities Indices Include:………………………………………………
Index Management Committee………………………………………………………
Duties and Responsibilities of the Index Management Committee ………………
Periodic Review of Indices Constituents……………………………………………
6
137
137
137
137
138
138
12.6
12.7
Changes to Constituent Companies …………………………………………………… 139.
Changes to Constituent Weightings…………………………………………………… 140
APPENDIX 1
FEES STRUCTURE
APPENDIX 2
APPLICATION FOR LISTING OF SECURITIES AT THE DAR ES
SALAAM STOCK EXCHANGE
APPENDIX 3
LETTER OF UNDERTAKING TO COMPLY WITH LISTING REQUIREMENTS
OF THE DAR ES SALAAM STOCK EXCHANGE
APPENDIX 4
CONTINUING OBLIGATIONS OF LISTING
ATTACHMENT 1
GUIDELINES ON HALF –YEARLY REPORTS AND PRELIMINARY PROFITS
STATEMENTS OF THE FULL YEAR.
APPENDIX 5
CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED
COMPANIES
APPENDIX 6
REQUIREMENTS FOR MEMORANDUM AND ARTICLES OF ASSOCIATION
APPENDIX 7
ADDITIONAL REQUIREMENTS OF CONTENTS OF PROSPECTUS
APPENDIX 8
FORM OF CERTIFICATE BY THE SPONSORING MEMBER
APPENDIX 9
APPLICATION FOR A DECLARATION OF DEFAULT
APPENDIX 10
APPLICATION FOR COMPENSATION
APPENDIX 11
APPLICATION TO DEPOSIT NON-LISTED SECURITIES AT THE CENTRAL
DEPOSITORY SYSTEM OF THE DAR ES SALAAM STOCK EXCHANGE
APPENDIX 12
LETTER OF UNDERTAKING TO COMPLY WITH CDS RULES OF THE DAR
ES SALAAM STOCK EXCHANGE
APPENDIX 13
CDS FEES
APPENDIX 14
CDS FORMS
APPENDIX 15
CDS AGREEMENTS
APPENDIX 16
AGREEMENTS FOR PROVISION OF ADVISORY SERVICES
APPENDIX 17
LETTER OF UNDERTAKING TO COMPLY WITH LISTING REQUIREMENTS
OF THE DAR ES SALAAM STOCK EXCHANGE BY NOMINATED ADVISOR
7
CHAPTER ONE
INTERPRETATIONS AND DEFINITIONS
In these Rules, unless the context requires otherwise:"Accrued Interest"
shall mean the amount of interest which has accumulated in respect of an
interest-bearing security from the last payment up to settlement day.
“Act” shall mean the Capital Markets and Securities Act, Cap. 79.
“Annual Accounts”
shall mean the financial statements for the year in question including the
balance sheet, the profit and loss account, cashflow statements, directors’
report and the notes to the accounts.
"AON’ shall mean a short for “All or Nothing” which refers to a single lot of securities which can only
be sold in full without being split into smaller lots.
“Applicant for Listing” shall mean a New Applicant or an Issuer which is applying for further securities
to be listed.
"Application for Compensation" shall mean such form as may be adopted by the Council for
completion by an investor who wishes to apply for compensation from the
Fund.
"Application for a Declaration of Default" shall mean such form as may be adopted by the Council for
completion by the investor in order to obtain a declaration of default of a Licensed
Dealing Member;
“Authorised Central Depository System Operator” shall mean a Licensed Dealing Member of
the Dar es Salaam Stock Exchange or any other institution approved by the Council of
the Dar es Salaam Stock Exchange to open and operate Central Depository System
accounts upon instructions of investors or to operate its own account.
“Authority”
shall mean the Capital Markets and Securities Authority established under the Capital
Markets and Securities Act, Cap. 79.
Authorized Dealers Representative (ADR) shall mean a natural person licensed in accordance with
CMS Act, cap. 79 and permitted by the Council to carry on the business of dealing in
securities using the facilities of the Exchange on behalf of the Licensed Dealing
Member.
"Best Market" shall mean the current highest bid and the lowest offer in a specific security.
"Bid"
shall mean an order by a stockbroker to buy securities at a certain price and shall also refer to
a price which a buyer is willing to accept for his securities.
8
“Block Certificate” shall mean a single certificate issued by a Company Registrar of a listed company
representing a large number of securities for holders grouped together (in a fungible
form).
"Block-trade" shall mean lots of shares with a value exceeding Tshs. 100 million which is sufficiently
large to exceed the capacity of the market as regulated by block trade rules.
"Board Lot"
shall mean a standard number of shares or stocks, determined by the Exchange,
which can be traded on the market.
“Bond Registrar” shall mean the holder of register for the listed bond who shall also be the Transfer
Agent for the listed bond.
“Book-entry” shall mean the entries made on computer database, within the Central Depository of
Securities, to record the ownership or change of ownership of securities.
“Borrower”
shall mean a holder who has mortgaged securities held or to be held in the Central
Depository System as collateral against a loan.
“Business day”shall mean any day in the week that is not a Saturday or Sunday, or gazetted holiday,
or announced by the Council in a general notice.
“Capital”
shall mean share capital including preference shares
“Central Depository System” shall mean the Central Depository System (CDS) of the Dar es Salaam
Stock Exchange.
“Chairman”
shall mean the Chairman of the Council of the Dar es Salaam Stock Exchange
“Chief Executive” shall mean the Chief Executive Officer of the Dar es Salaam Stock Exchange.
“Clearing Bank” shall mean a Commercial Bank appointed by Licensed Dealing Member of the Dar es
Salaam Stock Exchange to settle transactions effected through the Dar es Salaam
Stock Exchange on behalf of the Licensed Dealing Member.
“Clients Contract Note” shall mean a record of the details of a transaction, its total value and all
charges.
“Client Depository Account” shall mean a record in ledger form describing the details of securities
investments held by a client in the CDS of the Dar es Salaam Stock Exchange.
“Clients Reference Number” shall mean an identification number designated for a client by an
Authorised Central Depository System Operator
“Companies Act” shall mean Chapter 212 of the Laws of Tanzania.
“Company Registrar” shall mean an entity or person who maintains the record of securities holders
for the outstanding securities of a listed company.
9
“Council” shall mean the governing organ of Dar es Salaam Stock Exchange (and in relation to any
provision shall include a committee of the Council or the Chief Executive exercising
powers under the provision delegated by the Council).
“Date of Default” shall mean the date when the Licensed Dealing Member has been declared to be in
default pursuant to the Rules of the Dar es salaam Stock Exchange.
“DATS” shall mean the Dar Es Salaam Stock Exchange Automated Trading System.
“Default Notice” Shall mean such notice as may be issued by the Dar es Salaam Stock Exchange
announcing the declaration of default.
“Delivery Confirmation” shall mean a form describing the documents delivered between the Dar es
Salaam Stock Exchange, Licensed Dealing Members and the Issuers.
“Deposit”
shall mean the delivery and transfer of securities by a client to CDS custody, through
an Authorised CDS Operator.
“Depository Receipt” shall mean a document issued by the Dar es Salaam Stock Exchange
representing title in respect of securities deposited in the CDS by a client.
“Discretionary Account; shall mean an account in which the client gives an LDM discretion which
may be complete or within specific limits as to the purchase, sale of securities including
selection, timing and price to be paid or received.
“Enterprise Growth Market Segment(EGMS)” shall mean a market segment for listing emerging,
small and medium companies with no track record for investors to estimate their
potential earnings before investing or Markets that are categorized as of high risk.
“Exchange” shall mean the Dar es Salaam Stock Exchange (DSE) reference to the Exchange shall
also mean the Dar es Salaam Stock Exchange.
“Financial Year” shall mean the period covered by the Company’s profit and loss account prepared for
the purposes of section 123 of the Companies Ordinance, Cap.212.
“First Tier”
shall mean the first tier of listing.
Floor Trader; shall mean a natural person permitted by the Council to exclusively trade on behalf of
the LDM after having passed the Induction Course organized by the Exchange.
“Fund” shall mean the Fidelity Fund established by virtue of Section 83 of the Capital Markets and
Securities Act, ca-p. 79.
“Fungible”
shall mean all securities deposited at the CDS of the DSE in the state of being held
together in a single batch and not de-segregated to individual holders.
“Government” shall mean the Government of the United Republic of Tanzania.
“Group”
shall mean the Issuer and its subsidiaries.
10
“High Risk Markets” shall mean markets where companies without a track record on their
performance are listed.
“Holding Company” shall mean the same meaning given under section 126 of the Companies
Ordinance, Cap.212.
"Investor"
shall mean a person who has entrusted cash or securities to a Licensed Dealing
Member in connection with transactions in securities listed at the Exchange. Provided,
however, that the categories of investors listed hereunder shall not be considered as
investors and shall be excluded from claiming against the Fidelity Fund. The
categories in question are the following;
(a)
LDMs, financial intermediaries and investment firms holding investment
services licenses issued by the Capital Markets and Securities Authority;
(b)
Collective Investment Schemes as defined under Capital Markets and
Securities Act, 1994;
(c)
government and recognised administrative authorities in terms of law.
(d)
provincial, regional, local or municipal authorities;
(e)
directors and managers of the defaulting LDMs as well as holders of at least
5% of the capital of such firms and members of the external auditing bodies
who audit the accounts of such firms; and
Other companies in the same group of the defaulting stock broking firms.
“Issuer”
shall mean a public company or other legal entity whose securities are listed at the
DSE or are the subject of an application for listing or any entity with a potential for
listing.
“Lender”
shall mean a party who accepts securities held in the CDS as collateral for a loan
issued.
“Licensed Dealing Member (LDM)” shall mean a body corporate licensed as a dealer or broker in
accordance with the Capital Markets and Securities Act, cap. 79,and permitted by the
Council to carry on the business of dealing in securities at the facilities of the DSE.
“Listed”
shall mean admitted to the official list of the DSE (except where the context requires
otherwise); “listing” being construed accordingly.
“Listed Company” shall mean a company, any part of the shares of which has been listed.
“Listed Securities” shall mean the securities of that class which are listed.
“Loan Securities” shall mean interest bearing securities which do not have a share in the equity of the
company.
11
“Market Imbalance” shall mean a situation in the Pre-open Market when the best bid is higher than
the best offer.
“Market Index” statistical measurement of the performance of a particular group of securities, using a
clearly defined set of rules that makes them comparable regardless of the market
conditions.
Main Investment Market Segment (MIMS)” shall mean a market segment for listing which caters for
companies with a track record and allowing investors to estimate their potential
earnings before investing.
“Market Official” shall mean an Exchange Official who manages the trading operations of the DSE in
accordance with the Rules of the DSE.
“Member”
shall mean a member of the DSE
“Mortgage of Securities” shall mean the use of securities held at the CDS to guarantee performance
by a borrower of a contract between borrower and lender.
“Netting”
shall mean a process by which gross, or trade-by-trade obligations between counter
parties in a transaction are settled by a single transfer of the net amount of funds.
“Net Turnover” shall mean the amount derived from the sale of products and the provision of services
falling within an undertaking’s ordinary activities after deduction of sales rebates and
any taxes directly linked to turnover.
“New Applicant of listing” shall mean an Issuer, no part of whose shares or debt securities are
already listed.
“Nominated Advisor” shall have the same meaning with that given under the Capital Markets and
Securities Act, 1994 as amended.
“Odd Lots”
shall mean any number of shares that are less than the minimum tradable or board lot.
“Offer” shall mean an order by a stockbroker to sell securities at a certain price and shall also refer to a
price which a seller will accept for his securities.
“Official List” shall mean all the securities traded on the Dar es Salaam Stock Exchange.
“Opening Algorithm”
shall mean a calculation used at the time of opening the trading session to
calculate an opening price for each security.
“Open Outcry” shall mean a trading system where transactions for securities are conducted by way of
traders shouting or crying out their orders before the Exchange Official who records the
orders on a trading board located in an open atmosphere room.
“Opening
Price” shall mean the price for each security obtained after the opening algorithm had
taken place. It is the price that is used to effect trade at its initial stage.
12
“Order”shall mean an instruction from a client to stockbroker to buy or sell securities.
“Pre-Opening” shall mean a state during the trading session where Authorized Dealers
Representatives (ADR) or Floor Traders (FT) can enter limit price orders and view
order quantity imbalance but during which no orders are executed.
“Price” shall mean the unit price of a security.
“Private Transfer”
shall mean a transfer of securities between the transferor and transferee which
does not involve monetary consideration effected through the DSE.
“Put through” shall mean an instance where a stockbroker has both buying and selling clients in the
same security and amounting to the same size and are executed on a special lots
section of the trading boards.
“Queue Priority” shall mean all orders are sorted according to the priority of orders for execution –
Queue priority rules as outlined in these Rules.
“Registrar of Companies” shall mean the public officer entrusted to carry out the duties of the
Registrar under the Companies Ordinance, Cap.212.
“Regular Order” shall mean all unfilled orders without any special terms where regular orders are
given priority in trading over all other orders.
“Rules” shall mean the Rules of the Dar es Salaam Stock Exchange (as may be amended from time to
time).
“Second Tier” shall mean the second tier of listing.
“Securities” shall include; shares, stocks, bonds, debentures, units and such other securities as
defined under the Capital Markets and Securities Act, 1994.
“Short Sale”
shall mean a sale of a security when the seller does not own the security, or have an
exercisable right of sale.
“Special Trade” shall mean a trade whose nature is classified by the Council as “special” and posted at
the special lot board.
“Special Terms”
shall mean all unfilled orders with any special terms and shall include All or
None, Minimum Fills and Minimum Blocks.
“Subsidiary Company” shall mean a subsidiary company as defined under Section 127 of the
Companies Ordinance, Cap.212.
“Symbol”
shall mean a set of characters that identifies the security being traded.
“Tick Size”
shall mean the step by step increase or decrease in price by which bids and offers may
be raised or lowered and sometimes referred to as spread.
13
“Trade, Deal, Matches” shall mean terms used interchangeably to refer to a bid and an offer which
have been either wholly or partially satisfied.
Trade Range” shall mean the price range established by the Exchange from time to time within which
a trade can take place on the market.
“Trading Board” shall mean the facility provided by the Exchange for manual matching during the
Board Trading Session.
“Trading Floor” shall mean the room, area and other facilities from time to time designated or made
available by the Exchange for effecting trades and other transactions between
members during trading session of the Exchange.
“Trading Session” shall mean the designated period during which orders can be executed, amended,
cancelled and traded where the beginning and the closing of the trading sessions are
signalled by the ringing of the bell by an Exchange Official.
“Transfer of securities to Dar es Salaam Stock Exchange custody” shall mean moving securities
from the custody of the transferor to the Exchange custody and such transfer shall not
convey any transferor’s beneficiary interests over the securities deposited at the CDS
transferee.
“Trust Account”shall mean a bank account opened and maintained by a Licensed Dealing Member of
the DSE into which all clients money is deposited as required under the Capital
Markets and Securities Act, 1994.
“Verification” shall mean the process of confirming the facts of a client’s claim to a security and the
status of the holdings.
Provided that where the masculine gender is referred to the same shall also mean female
gender.
The Council may dispense with the strict interpretation of any of the Rules if this is agreed by at least
two thirds of the members of the Council for the time being at a meeting of the Council in relation to
which the intention to consider the matter has been prominently indicated in the notice of the meeting.
14
CHAPTER TWO
2.0 ROLES, FUNCTIONS AND ORGANIZATION
STRUCTURE OF THE DAR ES SALAAM STOCK
EXCHANGE
2.1
The following are the basic roles of the Dar es Salaam Stock Exchange:
2.1.1
Raising Capital for Businesses
The Stock Exchange provides companies with the facility to raise capital for
expansion through selling securities to the investing public.
2.1.2
Mobilising Savings for Investment
When people draw their savings and invest in securities, it leads to a more
rational allocation of resources because funds which could have been
consumed or kept in idle deposits with banks are mobilised and redirected to
promote commerce and industry.
2.1.3
Redistribution of Wealth
By giving a wide spectrum of people a chance to buy securities and therefore
become part-owners of profitable enterprises, the stock market helps to reduce
large income inequalities because many people get a chance to share in the
profits of business that were set up by other people.
2.1.4
Improving Corporate Governance
By having a wide and varied scope of owners, companies generally tend to
improve on their management standards and efficiency in order to satisfy the
demands of these shareholders. It is evident that generally, public companies
tend to have better management records than private companies.
2.1.5
Creates Investment Opportunities for Small Investors
As opposed to other businesses that require huge capital outlay, investing in
securities, particularly shares, is open to both the large and small investors
because they can buy the number of shares they can afford. Therefore the
Stock Exchange provides an extra source of income to small savers.
2.1.6
Raising Funds for Government
The Government and even local authorities like municipalities may decide to
borrow money in order to finance huge infrastructural projects such as roads
construction, sewerage and water treatment works or housing estates by
selling Bonds. These bonds can be issued through the Stock Exchange
whereby members of the public buy them. When the Government or Municipal
15
Council gets this alternative source of funds, it no longer has the need to
overtax the people in order to finance development.
2.1.6
Barometer of the Economy
At the Stock Exchange, securities’ prices rise and fall depending, largely, on
market forces. Securities prices tend to rise or remain stable when companies
and the economy in general show signs of stability. Therefore the movement
of securities prices can be an indicator of the general trend in the economy.
2.2
FUNCTIONS OF THE DAR ES SALAAM STOCK EXCHANGE
2.2.1
The basic function of a stock exchange is to facilitate the raising of funds for
investment in long-term assets. While this basic function is extremely important and is
the engine through which stock exchanges are driven, there are also other quite
important functions;
(a) The mobilization of savings for investment in productive enterprises as an
alternative to putting savings in bank deposits, purchase of real estate and
outright consumption.
(b) The growth of related financial services sector e.g insurance, pension and
provident fund schemes which nature the spirit of savings.
(c) The check against flight of capital which takes place because of local inflation,
currency depreciation, and limited alternative investment opportunities.
(d) Encouragement of the divorcement of the owners of capital from the
managers of capital; a very important process because owners of capital may
not necessarily have the expertise to manage capital investment efficiently.
(e) Encouragement of higher standards of accounting, resource management
and public disclosure which in turn affords greater efficiency in the process of
capital growth.
(f)
Facilitation of equity financing as opposed to debt financing. Debt financing
has been the undoing of many enterprises in both developed and developing
countries especially in recessionary periods.
(g) Improvement of access to finance for new and smaller companies. This is
futuristic in most developing countries because venture capital is mostly
unavailable, an unfortunate situation.
(h) Encouragement of public floatation of private companies which in turn allows
greater and increase of the supply of assets available for long-term
investment.
2.2.2
There are many other less general benefits which stock exchanges afford individuals,
corporate organizations and even the Government. The Government for example could
16
raise long term finance locally by issuing various types of bonds through the stock
exchange and thus be less inclined to foreign borrowing.
2.3
ORGANIZATION STRUCTURE OF THE DAR ES SALAAM STOCK EXCHANGE (DSE)
The Dar es Salaam Stock Exchange Ltd (DSE) was incorporated on the 19 th day of September,
1996 under Cap.212 as a private company limited by guarantee and not having a share capital.
The formation of the DSE followed the enactment of the Capital Markets and Securities Act,
1994 which established the Capital Markets and Securities Authority (CMSA), the industry
regulatory body established with the mandate of promoting an orderly, fair and efficient capital
markets in Tanzania.
2.4
SUBSCRIBERS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF
THE DSE
2.4.1
The creation of the DSE came as a result of Government initiatives through CMSA and
various interested stakeholders whose joint concerted efforts facilitated the
establishment of the DSE.
2.4.2
The subscribers to the Memorandum and Articles of Association of the DSE are:(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
2.5
The National Insurance Corporation of Tanzania Limited (NIC);
The National Social Security Fund (NSSF);
The Parastatal Pensions Fund (PPF);
1st Adili Bancorp Limited;
CRDB Bank Limited;
Solomon & Co. Limited;
Exim Securities and Investment Limited;
Tanzania Securities Limited;
Orbit Securities Co. Limited;
TOL Limited and
Futurenet (T) Limited.
2.4.3
After incorporation the following were admitted to the company’s membership;
Rasilimali Limited, Core Securities Ltd, Vertex International Securities Ltd, National
Board of Accountants and Auditors, Tanzania Breweries Ltd, Tanzania Cigarette
Company Limited, Tanzania Tea Packers ltd. and Proper Consult (T) Ltd.
2.4.4
After completion of preparatory work to set up the Exchange, operations and trading
commenced on 15th April, 1998.
THE COUNCIL
2.5.1
The DSE is a Self-Regulatory Organization (SRO) with its own Council, the
governing organ which issues policies, guidelines, and directions and makes
17
Rules in accordance with the provisions of Memorandum and Articles of association
establishing the DSE.
2.6
2.5.2
The Council of the DSE is the Supreme authority of the Exchange which consists of
ten (10) members.
2.5.3
The structure of membership consists of three Licensed Dealing Members, institutional
investors, professionals, the public and the Exchange Chief Executive who is an exofficio member.
2.5.4
The Memorandum and Articles of Association of Dar es Salaam Stock Exchange
Limited allows the Council to formulate Rules with respect to membership, listing, delisting, dealing/trading, clearing and settlement, and protection of investors to mention
but a few.
2.5.5
The Council is also empowered to determine the salaries of the Chief Executive,
Managers and other officers of the Exchange, and pay any expenses necessary for the
smooth and efficient running of the Exchange.
MANAGEMENT
2.6.1
THE CHIEF EXECUTIVE
2.6.1.1 The Chief Executive is appointed by the Council and is responsible for
planning and formulating new development policies for approval by the Council
and for ensuring the implementation of these policies. He is in charge of the
day today operations of the Exchange. In discharging his functions he is
assisted by Managers. Besides being assisted by the Managers there are also
other supporting staff who support the Managers.
2.6.1.2 Without prejudice to the generality of the proceeding paragraph the
Chief Executive is also responsible for and have powers to (a)
(b)
(c)
(d)
(e)
(f)
ensure that the Managers carry on their duties in accordance with his
directives and any other directives issued by the Council;
keep under constant review current developments in the market and
to advise the Council on matters affecting the proper functioning of the
Exchange and recommend remedial actions;
assess and examine the short and long-term development plans of the
Exchange and advise the Council on possible new growth areas and /
or new services and products;
keep under review the evolution of practices in the market both locally
and internationally and recommend planned improvements and
strategic systems change as necessary;
perform all other functions as may be necessary or incidental for the
proper performance and functioning of the Exchange;
Recruit, train and supervise all Exchange employees and others
engaged by the Exchange;
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(g)
(h)
(i)
(j)
2.6.2
ensure there is compliance by market professionals to the DSE Rules
for the purpose of creating confidence in the market and protecting
investors;
provide mechanisms for evaluating companies applying for listing;
promote the image of DSE as a Self Regulatory Organization; and
carry other responsibilities as may be assigned by the Council.
MANAGERS
Reporting to the Chief Executive are the functional Managers. The key functional
Managers include:
2.6.2.1 MANAGER, FINANCE AND OPERATIONS
Appointed by the Council and is accountable to the Chief Executive.
Responsible for ensuring the effective performance of the following functions:(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Surveillance of the financial situation of stock broking firms and the
maintenance of members' security;
Accountant to the Exchange;
Supervising Trading Operations;
Overseeing Clearing, Delivery and Settlement system at the
Exchange;
Maintenance of proper books of accounts, preparations of quarterly
reports to the Council, budget, financial supervision of the affairs of
the Exchange and the preparation of statutory accounts;
Developing prudential financial and procurement system;
Organize and develop operational and information technology system
of the Exchange; and
Perform other duties as may be assigned by the Chief Executive.
2.6.2.2 MANAGER, CORPORATE SERVICES AND LEGAL COUNSEL
Appointed by the Council and is accountable to the Chief Executive.
Responsible for ensuring the effective performance of the following functions:(a)
(b)
(c)
(d)
(e)
(f)
The observance of the listing requirements as well as the continuing
listing requirements of listed companies;
The administration and conduct of trading at the Trading Floor and
settlement of any dispute between members relating thereto;
To organize, service meetings of the Council by providing secretarial
functions and coordinate implementation of the Council's decision;
Act as Legal Counsel to the Exchange and in this capacity develop a
self regulatory framework and oversee enforcement and compliance;
Develop personal and administrative system of the Exchange and
maintenance of personnel inventory records and files;
Conduct market investigations and surveillance to ensure orderly, fair
and equitable dealings in securities;
19
(g)
(h)
(i)
(j)
(k)
Distribution of company announcements, Council notices, distribution
of benefits to holders of securities and such other documents as are
specified by the Council to the members.
Keeping abreast with and review laws of the country and propose
amendments( where desirable) to confirm to securities industry;
The publication of all material specified by the Council relating to
trading and listed securities;
To liase with Government departments in evolving public policy for the
development of the capital markets ; and
Perform such other duties as may be assigned by the Chief Executive.
2.6.2.3 MANAGER, CLEARANCE AND SETTLEMENT
Appointed by the Council and is accountable to the Chief Executive.
Responsible for ensuring the effective performance of the following functions:(a) To oversee the operation of the Central Depository System (CDS)
including opening of investors’ accounts; depositing of securities in
investors’ accounts; clearing and settlement processing; updating
registers of securities holders as requested by issuers; generation of
securities’ balance statements for investors;
(b) To oversee the operation of trading system including entry of trade
matches; generation of various trading reports; and updating of
securities balances in the investors’ CDS accounts;
(c) To carry out on-going assessment of the effectiveness of the CDS
rules and procedures with the aim of improving the efficiency of the
CDS operations;
(d) To advise the DSE Council in the development of short term and long
term strategic plans for the CDS and other associated Management
Information System (MIS);
(e) To oversee maintenance of software and computer hardware systems
including preparing schedules for software upgrades and hardware
maintenance;
(f) To assess and ensure that the performance of installed computer
hardware and information system meets the accepted parameters of
operations at the DSE;
(g) To advise the DSE Council on the appropriate technologies to adopt
during the acquisition of software systems, computer hardware and
other technological accessories;
(h) To develop annual financial budget for the Clearance and Settlement
department, for incorporation in the DSE annual budget;
20
(i) To develop yearly work plans for the Clearance and Settlement
department for approval by the DSE Council;
(j) To work with the Chief Executive Officer and other Managers at the
DSE to ensure implementation of the approved work plans;
(k) Arranging for appropriate training programs for staff in the Clearance
and Settlement department;
(l) To perform such other duties as may be assigned by the Chief
Executive from time to time.
2.7
URGENT ACTIONS
The Chairman jointly with another Council member may exercise the power to issue
instructions to meet situations which require urgent action to stop malpractice, to protect
investors or to safeguard the financial integrity of the Exchange. Such instructions, however,
must be reported to the Council for ratification within seven working days.
21
CHAPTER THREE
3.0 MEMBERSHIP TO THE EXCHANGE
3.1
GENERAL
3.1.1
ADMISSION
(a) The admission to the DSE membership shall be open to all persons (natural and
legal) who have interest in the development of capital markets in Tanzania. There
shall be no maximum number of members.
(b) Provided that the Council may admit to associate membership any individual, firm,
body corporate or association which is committed to further the objects of the
Exchange including applicants falling within the following categories: listed
companies, companies with potential for listing, institutional investors and
professional associations.
(c) Associate members must be of good financial standing and integrity and shall be
required to comply with the general conditions for associate membership as laid
down by the Council, including the payment of subscriptions to the Exchange.
(d) Applicants for associate membership and associate members shall pay the fees
and subscriptions as shall be prescribed by the Council. No associate member
shall (unless this is specially decided by the Council) be entitled to remission of
fees and subscriptions on account of absence from Tanzania.
3.2
MEMBERSHIP, DISCIPLINE AND FINANCIAL BUSINESS CONDUCT
3.2.1
ELIGIBILITY
3.2.1.1 Natural Persons
Any Tanzanian may be admitted to the DSE membership provided he/she
meets the following criteria:(a) She/he is of the age of majority;
(b) She/he is of sound mind;
(c) She/he is not judged bankrupt;
(d) She/he is willing to pay admission as well as annual fees;
(e) She/he has no criminal record;
(f) She/he has been not declared unfit to be a member by a Court order;
(g) She/he has not defaulted in the DSE transactions
22
(h) She/He must submit recommendation letters from two reputable
referees.
3.2.1.2 Legal Persons
(a) The following Legal persons may be admitted to the DSE
membership: companies incorporated under the Companies Act,
2002, bodies corporate established under the Cooperative Societies
Act, Trust Bodies under Trustees Incorporation Ordinance and all
statutory bodies.
(b) Provided:(i) The applicant is duly established under the Tanzanian laws
and continue to so exist;
(ii) The applicant is solvent ;
(iii) The applicant pays the necessary fees
3.3
APPLICATION PROCEDURES FOR ASSOCIATE MEMBERS
An applicant for admission as an Associate Member shall deliver to the Chief Executive a duly
completed form in the form and content as shall be prescribed by the Council;
(a) In case of a Company
i)
Certificate of incorporation/registration
ii)
Constitutive documents establishing the bodies corporate such as the relevant
constitution, Trustee Deeds, Memorandum and Articles of Association
iii)
The profiles of the Board members and the Principal Officers of the company
iv)
Business Licence, or any legal document evidencing legal existence
v)
Audited accounts for the past three years
vi)
Statutory Declaration by the Principal Officer of the applicant to the effect that the
company is not adjudged insolvent
vii)
In case of a Nominated Advisor the applicant must meet all the above conditions
plus possession of a license issued by the Capital Markets and Securities Authority
in accordance with the Capital markets and Securities Act, 1994 as amended.
In case of an Individual-
23
An application by an individual or partnership firm for Associate membership shall meet the
following conditions:
(i) The applicant shall declare that she/he is not a member of any Licensed Dealing
Members (LDM);
(ii) That applicant shall declare that she/he is not adjudged bankrupt;
(iii) The applicant shall declare that he/she does not have criminal records;
(iv)The curricula vitae indicating the Nationality, occupation/profession
3.4
TERMINATION
The DSE members shall cease to be members if the following happens:
(a)
Natural Persons
Upon death of an individual, failure to pay requisite fees in three successive years, is
judged bankrupt and when informs the DSE of his/her intention to cease his/her
membership by filing a three months notice.
(b)
Legal Persons
If the body corporate is wound up or is under receivership or is de-registered, is
declared unfit to be a member by a Court order, cease to exist under whatever reason,
resigns voluntarily and fails to pay requisite fees for three successive years
3.5
LICENSED DEALING MEMBERSHIP
No person shall be qualified for admission to Licensed Dealing Membership of the Exchange
unless(a) in possession of a currently valid dealer's or broker’s license issued under Part IV of the
Capital Markets and Securities Act, Cap. 79;
(b) has been admitted as an associate member of the Exchange in accordance with the
Articles; and
(c) meets the other qualifications as may be set out by the Council.
3.6
APPLICATION PROCEDURE FOR LDMS
3.6.1
An applicant for admission as a LDM shall deliver to the Chief Executive a duly
completed application form as shall be prescribed by the Council.
24
3.6.2
Upon the decision of the Council that the applicant is qualified and fit and proper for
LDM, the applicant shall pay the entrance fee and admission fee for the time being
payable within the period stipulated by the Council, and the Council shall admit the
license holder to Licensed Dealing Membership. As from the date of such payment, the
license holder shall be registered as a LDM and be entitled to all the benefits accorded
to such members subject to these Rules. Should the payment not be made within the
prescribed period, the application shall automatically lapse, unless, consequent upon
an appeal by the applicant to the Council, the Council directs otherwise.
3.6.3
Licensed Dealing Membership and Applicants thereto, shall pay the fees and
subscriptions as shall be prescribed by the Council. No LDM shall (unless this is
specially decided by the Council) be entitled to remission of fees and subscriptions on
account of absence from Tanzania.
3.6.4
BANK GUARANTEE
3.6.4.1 Every LDM shall furnish the Exchange with a bank guarantee that
shall not be less than the amount prescribed by the Council. Such
bank guarantee shall be free of any charges of encumbrances and
shall not count for purposes of a DM's share capital prescribed by
these Rules. The Bank Guarantee shall be TZS 20 million and 10
million for Dealers and brokers respectively.
3.6.4.2 An LDM who fails to restore its bank guarantee in accordance with the
DSE unless shall not be entitled to trade until the guarantee shall have
been restored.
3.6.5
INDEPENDENCE
No LDM shall directly or indirectly hold a beneficial interest in the share capital of any
other LDM.
3.7
EXPULSION
An LDM shall be liable to expulsion in accordance with these Rules if, in any of the particulars
or information given by the LDM, any misrepresentation or omission of a material fact shall be
found to have been made at the time of application. In the event of expulsion, the LDM shall
cease forthwith to have access to the trading and clearing facilities of the Exchange.
3.8
LIABILITY OF DIRECTORS AND OFFICERS
3.8.1
Any director, manager, or officer of a LDM shall together with such LDM be liable
under the Rules for any breach, non compliance, violation or contravention of the Act,
the Articles or these Rules if such breach, non-compliance, violation or contravention
was committed or caused with the consent or connivance of or attributable to any
neglect on the part of such director, manager, or officer.
3.8.2
No LDM shall be eligible for election as a member of the Council but a LDM may
propose any of its executive directors for such election.
25
3.8.3
3.9
Only executive directors or their duly appointed agents may act as corporate
representatives of LDM at general meetings of the Exchange.
INCAPACITY
3.9.1
An LDM shall be incapacitated in the event of the following:(a) ceasing to have a director and a principal officer qualified as required by the Act;
becoming insolvent;
(b) liquidation of an LDM;
(c) passing a resolution to wind up or court order being made for the appointment of a
liquidator, receiver or winding up against an LDM; all the rights and benefits of and
in the membership shall be immediately suspended.
(d) The personal representative, trustee, receiver, or liquidator as the case may be
who shall have full charge, and power over the assets of an LDM shall abide by
the Articles, these Rules and the decisions of the Council as if he was the LDM.
(e) The transfer bought and sold notes shall be executed by the personal
representative, trustee, receiver or liquidator as the case may be as transferor and
the Nominee as transferee and lodged with the Exchange.
3.10
COMPANY NAME AND ADDRESS
3.10.1 Every LDM shall register with the Exchange the company name under which it
carries on the business of dealing in securities as a LDM and no LDM shall
without the prior consent of the Council change the company name so
registered.
3.10.2 The company name of a LDM registered with the Exchange shall be the same as that
registered by such member under the Companies Ordinance.
3.10.3 The Council shall have the power to prohibit any LDM from using any company name.
3.11
A LDM may register with the Exchange more than one business address held for the
purpose of dealing in securities. If a LDM registers more than one business address, the
Member shall specify one as its principal business address. In this context, business address
shall mean a place where, other than the Trading Floor, the business of dealing in securities is
frequently carried out by or on behalf of the Member.
3.12
An LDM shall give advance notice of commencement, temporary suspension, cessation and
commencement of business to the Council.
3.13
An LDM shall be responsible for all acts done or contracts committed by its directors,
employees or agents in its business of dealing in securities.
26
3.14
An LDM shall keep complete records and accounts of its business of dealing in securities and
shall ensure that such records comply with the requirements of the Act.
3.15
DISCIPLINARY PROCEDURE
3.15.1 The Council to require a written explanation from the LDM to be given within 7 days.
3.15.2 The Council shall upon receipt of written explanation deliberate on it trough it’s
Disciplinary Committee and make out decision.
3.15.3 Unless the context otherwise requires, references to an "LDM " in Rule 3.15.1 shall be
deemed to include any former LDM and a reference to "Membership" shall be
construed accordingly.
3.15.4 In all disciplinary matters brought under the consideration of the Council, their decision
whether expressed by a resolution or otherwise shall be final and shall be carried out
forthwith by every Member concerned.
3.15.5 In any disciplinary matter(a) The Council or (its Disciplinary Committee) may resolve to impose any of the
penalties specified in these Rules upon an LDM in respect of whom
disciplinary action is taken which results in a finding of gross misconduct.
(b) Where such action results in a finding of misconduct but not gross misconduct
the penalty imposed shall not exceed a reprimand by the Council. Alternatively
or additionally a fine as may be imposed by the Council plus the amount of any
improper profit which the LDM may be found to have received.
(c) Where such action results in a finding of minor misconduct but not misconduct
or gross misconduct the penalty imposed shall not exceed a reprimand by the
Council. Alternatively or additionally a fine as may be imposed by the Council.
3.15.6 Acts of misconduct may consist of any of the following :
(a) Breach of any rules of good Stock Exchange practice;
(b) Failure to comply with a decision of the Council;
(c) Conduct the manner of which is detrimental to the interests of the Exchange;
(d) Conduct the manner of which is dishonourable or disgraceful or improper or
unbecoming the character of an LDM;
(e) Failure to have an ADR or Floor Trader on the Trading Floor at any time during
a trading session;
(f) Conduct the manner of which is disorderly or involves wilful obstruction of
business on the Trading Floor or otherwise;
27
(g) Knowing involvement in or conduct, neglect or default which contributes to an
act of minor misconduct, misconduct or gross misconduct by an LDM or any of
the partners, directors, shareholders, employees or agents thereof;
(h) Failure on the part of an LDM who knew or ought to have known of any
proposed or actual act of minor misconduct, misconduct or gross misconduct
by an LDM or any of the partners, directors, shareholders, employees or
agents thereof, to take reasonable steps to prevent it or bring to the attention
of the appropriate person or otherwise to deal with it as may be appropriate;
(i) Failure on the part of managing director or director, of an LDM to ensure that
the administrative structure of his company is adequate and that its operations
are conducted in accordance with good Stock Exchange practices; and
(j) Failure to pay any fine imposed within the time specified by the Council or any
extension of time granted by the Council.
3.16
DISCIPLINARY MEASURES
Subject to Rule 3.21, the penalties which may be imposed under the disciplinary
procedure, in descending order of severity, are:
(a) Expulsion from membership;
(b) Suspension from trading in any manner whatsoever;
(c) Suspension of the right of a representative of an LDM to enter the Trading Floor or use any
system of the Exchange;
(d) Censure;
(e) Reprimand by the Council.
(f) Payment of Fine/Penalty.
3.17
Disciplinary proceeding against a former LDM shall not be instituted more than one year after
the cessation, resignation or lapsing of its membership.
3.18
NOTIFICATION TO THE PUBLIC
The Council may, in their absolute discretion and in such manner as they may think fit, notify or
cause to be notified to LDM and to the public:
(a) That any LDM has become a defaulter or has ceased to be a Member;
(b) That any LDM has been suspended;
28
(c) That any LDM has been censured, suspended or expelled. Such notification shall name
the LDM, recite the circumstances of his offence and the penalty imposed; or
(d) That any LDM has been fined (with the amount of the fine), provided that the fine has been
imposed as a penalty additional to censure, suspension or expulsion.
3.19
FINES
3.19.1 A fine imposed under these Rules shall be a debt due from the LDM to the Exchange
and payable within the time specified by the Council or any extension of time granted
by the Council.
3.19.2 The proceeds of a fine imposed under these Rules shall be credited to the funds of the
Exchange.
3.20
SUSPENSION FOR NON-PAYMENT OF FINE
If any LDM shall not pay fine imposed under these Rules the Council may on 14 day's
notice suspend such Member from all privileges of membership until the fine is paid.
3.21
DISPUTES BETWEEN MEMBERS
3.21.1 All LDMs are obliged under this Rule to ensure that all disputes arising out of or in
connection with the trading business of the Exchange are settled amicably.
3.21.2 That in the event the dispute fails to be settled amicably the parties to the dispute shall
resort to the Arbitration procedures prescribed by the Rules of the DSE and that such
procedures shall be applicable to any disputes between LDM arising out of or in
connection with the trading business of the Exchange.
3.21.3 That neither of the parties to such a dispute shall attempt to enforce by law any claim
against the other part, arising out of or in connection with the trading business of the
Exchange without first having tried to resolve the dispute amicably and secondly
having exhausted the Arbitration process of the Exchange.
3.22
FINANCIAL, ACCOUNTING AND BUSINESS CONDUCT
3.22.1 Each LDM shall at all times adhere to the principles of good business practices in the
conduct of its business affairs.
3.22.2 Each LDM shall ensure that all its ADR’s and Floor Traders comply with Exchange's
Rules or requirements.
3.22.3 The Exchange may require at any time that the name, terms of employment, and
actual duties of any person employed by an LDM be furnished to the Exchange,
together with such other information with respect to such employee as it may deem
appropriate to permit it to enforce compliance with the Rules of the Exchange.
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3.22.4 No business shall be transacted on account of an employee or for an account in which
an employee has a direct or indirect interest, except with the prior written consent of an
executive director of the LDM in respect of each transaction.
3.22.5 An LDM shall not buy or sell securities for a person employed by another LDM.
3.22.6 An LDM shall not employ in its business a person who is not of good standing.
3.22.7 No LDM shall allow clients to use or operate out of its business premises.
3.22.8 Every LDM is required through a principal officer to(a) use due diligence to learn the essential facts relative to every client, every order,
every cash account accepted or carried by the LDM and every person holding
power of attorney over any account accepted or carried by the LDM;
(b) diligently supervise all accounts handled by its ADR;
(c) specifically approve the opening of an account prior to or promptly after the
completion of any transaction for the account of or with a client. The designated
principal officer approving the opening of the account shall, prior to giving his
approval, be personally informed as to the essential facts relative to the client and
to the nature of the proposed account and shall indicate his approval in writing on
a document which shall become part of the permanent records of the LDM.
3.22.9 All orders to buy or sell securities shall be in writing and be signed by the client.
3.22.10 An LDM shall(a) prior to entering into transactions for an account for a corporation, have on its file
a resolution of the directors of the corporation empowering specific directors and
officers to trade in securities in an account on behalf of the corporation and to
execute all documentation necessary to effect transfers and assignments in
connection with trading on the corporation's account;
(b) Where a resolution of the directors cannot be obtained, the principal officer of the
LDM carrying the account shall prepare and sign a memorandum for the
Member's files indicating the basis upon which it believes the corporation can
properly engage in transaction have been duly authorised to trade on its behalf;
(c) prior to accepting orders from a third party for the account for any client other
than a client referred to in (i) have on file a trading authority signed by the client
empowering the third party to enter orders of the account.
3.23
NOMINEE ACCOUNTS
3.23.1 Where an agency account is carried by an LDM, its files shall contain the name of the
principal for whom the agent is acting and written evidence of the agent's authority to
trade on its behalf. Such files shall be made available to the Exchange at any time on
request. Where estate and trustee accounts are involved or where a husband is acting
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as agent for his wife, or a wife is acting for her husband, a Member should act on
advice from legal counsel as to the documents that should be obtained before opening
the account.
3.23.2 All client accounts must be identified and designated by the full name of the client and
no LDM shall carry a client account designated only by a number or symbol.
3.23.3 All LDM are required to inform the Exchange promptly of particulars of delinquent
accounts.
3.24
PARTICULARS OF CLIENTS
3.24.1 All particulars relating to every client shall be recorded and maintained up to date at
the office of the LDM.
3.24.2 Such particulars shall include the identity card and /or passport numbers, residential
address and telephone numbers, occupation and name, address of employer if
applicable and all information concerning the client that may be useful in identifying
such client, in addition to the particulars prescribed by the Council.
3.25
CONTRACT NOTES
An LDM shall forthwith (but not later than the next business day following the relevant dealing)
dispatch by ordinary post or hand delivery to its client a contract note in respect of the
purchase or sale of securities executed for and on account of the client including the following:
(a) The name and style under which the LDM carries on business and the address of the
principal place at which it so carries on business;
(b) A statement as to whether the LDM is acting as principal;
(c) The name of the person to whom the LDM is required to give the contract note;
(d) The date of the bargain, and the date on which the contract note is made out;
(e) The quantity and description of the securities that are being acquired and disposed of;
(f)
Except in the case of private transfers, the price per unit of the securities;
(g) The amount of consideration payable under the contract or, in the case of an exchange,
sufficient particulars of the securities exchanged to identify them;
(h) The rate of amount of commission payable in respect of the contract;
(i)
The amount of stamp duty (if any) and registration charges (if any) payable in connection
with the contract and, where applicable, in respect of the transfer;
(j)
The amount of exchange transaction fees or other Exchange charges;
(k) The fee payable to the Authority by the client; and
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(l)
3.26
The word: "SUBJECT TO THE RULES OF THE DAR ES SALAAM STOCK EXCHANGE"
STATEMENTS OF ACCOUNT TO DISCRETIONARY CLIENTS
3.26.1 Statements of Account shall be sent to all clients having discretionary accounts on a
monthly basis. Statements shall set forth the money balance carried forward, and
security position as of the statement date.
3.26.2 Each statement of account sent to a client shall bear a legend as follows:
"A financial statement of this Licensed Dealing Member of the Dar es Salaam Stock
Exchange is available for your personal inspection at our offices".
3.27
BROKERAGE
3.27.1 LDM,s must advise their clients as to all the commission rates and other charges to be
applied to transactions carried out on the client's behalf before the business is
accepted.
3.27.2 LDM’s will advise their clients as to the indicative rate of commission which has been
approved by the CMSA.
3.27.3 All charges and commissions levied shall be as shown on the contract note.
3.27.4 All bank charges or expenses incurred on behalf of clients shall be borne by the clients
concerned.
3.27.5 Where a company make floatation whether by public issue, rights, offer for sale,
placing of tender, and an LDM is appointed a sponsoring Member, such Member shall
be paid a fee, not being brokerage, as may be negotiated between the parties
concerned.
3.28
TRANSFERS
3.28.1 All transfers of securities which are defined under the Act as dealing in securities shall
be processed in accordance with the Trading Rules of the Exchange. This shall include
private transfers of securities.
3.28.2 Private transfers shall include(a) Gifts to parties authorised by law to receive such gifts such as charities and
philanthropic legal persons;
(b) Gifts to close relatives which shall include Spouses, children, parents, and
grandparents as duly recognised by law;
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(c) Operation of law;
(d) Administration of estates; and
(e) Corporate action, through restructuring where there is no transfer of beneficial
interests.
3.28.3 All private transfers, shall be approved by the Exchange upon receiving an application
from an LDM
3.29
FEES PAYABLE WITH RESPECT TO PRIVATE TRANSFERS
A nominal fee of 25% of the normal Commission at the prevailing market price being
transferred shall be payable by the transferee to the LDM subject to a minimum of Tshs. 1,000/
= of which 10% shall be paid to the DSE.
3.30
CLEARING FEES
Every LDM shall pay to the Exchange in respect of business transacted and cleared through
the Exchange with respect to clearing, settlement or other related activities the fee of charge
prescribed under these Rules.
3.31
PAYMENT TO CLIENT
3.31.1 The amounts due to a client in respect of a bargain shall be paid to the client by a
cheque drawn by the LDM (or bankers payment) not later than the business day next
following the Clearing house Settlement day, less any fees payable to the Exchange,
Authority, and Fidelity Fund by the client
3.31.2 All clients and other fees payable by an LDM in respect of dealings in marketable
securities shall be charged to and paid by the Member and not passed on to the client.
3.31.3 The amount deductible from payment to the client under this Rule 3.31.1due to the
Exchange and the Authority shall be remitted directly to the Exchange and Authority by
the LDM.
3.31.4 A clients account operated for a person associated with an LDM shall be operated by a
principal officer duly authorised by the Member's board of directors and shall be made
available for inspection at any time by the Exchange.
3.32
DISCRETIONARY ACCOUNT
3.32.1 No LDM shall exercise any discretionary authority in respect of a discretionary account
unless –
(a) the client has given prior written authorisation to the LDM to exercise discretion on
the account.
(b) the LDM has accepted the discretionary account in accordance with these Rules.
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3.32.2 The authorisation given to the LDM shall specify the investment objectives of the client
with respect to the particular discretionary account.
3.32.3 Each authorisation or acceptance may be terminated by notice in writing by LDM or the
client, as the case may be.
3.33
PROHIBITION ON CREDIT TO CLIENTS
An LDM shall not provide credit to a client.
3.34
EXPOSURE TO A SINGLE SECURITY
3.34.1 No LDM shall permit its exposure to a single security to exceed 100% of its average
adjusted net capital.
3.34.2 In sub rule 3.34.1 above, "exposure to a single security" means (a) the net amount of the single security underwritten or sub-underwritten by the
LDM;
(b) the book value of the single security carried on the LDM own account;
3.34.3 Rule 3.35 (a)shall not apply to (a) securities issued by the Government or its agencies ; and
(b) the LDM arbitrage transactions.
3.35
Every LDM shall maintain records in sufficient details to show particulars of: (a) all moneys received or paid, including moneys paid to, or disbursed from a Trust Account;
(b) all purchases and sales of securities by persons associated with the LDM and the charges
and credit arising therefrom, and the names of the buyer and seller respectively, of each
of those securities;
(c) all income received from commissions, interest and other sources and all expenses,
commissions and interest paid;
(d) all assets and liabilities including contingent liabilities of the LDM;
(e) all securities that are the property of the LDM, showing by whom the securities, or the
documents of title to the securities, are held and, where they are held by some other
person, whether or not they are held as security against loans or advances;
(f)
all securities that are not the property of the LDM and for which the LDM or any nominee
controlled by it is accountable, showing by whom, and for whom, the securities or the
documents of title to the securities are held and the extent to which they are either held for
34
safe custody or deposited with a third party as security for loans or advances made to the
LDM.
3.36
TRUST ACCOUNTS
3.36.1 Each LDM shall establish and keep in a bank or banks in Tanzania one or more Trust
Accounts, designated or evidenced as such, into which it shall pay: (a) all amounts (less any commission and other proper charges) that are received
from or on account of any person (other than an LDM) for the purchase of
securities ; and
(b) all amounts (less any commission and other proper charges) that are received for
or on account of any person ( other than an LDM) from the sale of securities and
that are not paid to that person or as that person directs not later than the next
bank business day following the day on which they were received by the LDM.
3.37
CIRCUMSTANCES UNDER WHICH MONEY CAN BE WITHDRAWN FROM TRUST
ACCOUNTS
3.37.1 All amounts received by the LDM for or on account of any person and are required by
Rule 3.36 above to be paid into a Trust Account shall be retained in the Trust Account
until(a) paid to the person entitled thereto or as such person directs in writing;
(b) withdrawn for the purpose of defraying commission and other proper
charges;
(c) paid to the LDM moneys to which it is entitled being moneys that were paid
into the Trust Account but were not required to be so paid; and
(d) paid as otherwise authorised by law.
3.37.2 The Trust Accounts shall be designated “clients’ account” and shall solely be applied to
receive moneys deposited by clients for the purchase of securities and effect payments
for securities transacted.
3.37.3 The Trust Accounts shall not under any circumstances be co-mingled with any other
bank accounts operated by the LDM; and
3.37.4 The Exchange shall have power to inspect the operations and activities of all Trust
Accounts maintained by the LDM at such intervals as may be determined by the
Council.
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3.38
ANNUAL ACCOUNTS
Each LDM shall submit to the Exchange annual accounts audited by auditors registered by the
National Board of Accountants and Auditors, within three months following the end of the
LDM's financial year.
3.39
QUARTERLY RETURNS
3.39.1 Each LDM shall, at the end of each quarter of a financial year, submit to the Exchange,
a quarterly report indicating the financial performance of the company during that
particular quarter. The quarterly financial report that is required by this rule shall be in
the manner and form prescribed in the CMS (Accounting and Financial) Regulations
1997 [G.N. N: 14 of 1997].
3.39.2 Where a LDM fails to submit the statements required in Rule 3.57 within the prescribed
time, there shall be imposed upon the LDM a charge as may be decided by the
Council, for each day that the statements are not submitted, unless an extension of
time has been granted. Requests for extension of time must be submitted to the
Exchange at least three business days prior to the due date.
3.40
NET CAPITAL AND AGGREGATE INDEBTEDNESS
The net capital and aggregate indebtedness shall carry the same meaning as provided under
the CMS (Accounting and Financial requirements) Regulations.
3.41
CODE OF BUSINESS CONDUCT
3.41.1 Fiduciary Responsibility
No LDM shall use the knowledge and information gathered from a client in the course
of its business dealings with a client which shall be of a fiduciary nature for the
advancement of the LDM's or the LDM's associates' financial interest whether directly
or indirectly.
3.41.2 Conflict of interest
(a) In the event of any conflicts of interest directly or indirectly between LDM and
client, the LDM shall not accept the instructions of the client in relation to the
transactions in question or shall accept such instructions only upon having
informed the client of the possible conflict and the client approving the proposed
course of action.
(b) Actual or potential conflicts of interest include, but not exclusively;
(i)
Dealing as a principal with the client;
(ii)
Acting on behalf of the Issuer of the securities; and
(iii)
Acting for both parties to the deal.
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3.41.3 Priority of Client’s interests
An LDM shall place all orders through the Trading Floor and shall clearly distinguish
business transacted for its clients and business transacted on behalf of persons
associated with the LDM. At all times, the LDM shall first consider the interest of its
client and its own interest shall be subordinate to that of the client.
3.41.4 Market manipulation
(a) An LDM shall avoid any practice which may create a false market and may not
directly or indirectly participate in any operation by others which shall have a
similar result.
(b) Any knowledge gained by an LDM of a transaction which would result in the
creation of a false market should immediately be reported by the LDM to the
Exchange.
(c) A false market includes a market in which the movement in the price of a security
or the level of the price of a security is created by the presentation of information
which is false, exaggerated or tendentious or is brought about or sought to be
brought about by any one LDM or a group of them to deliberately distort the
market for financial gain.
3.41.5 Compliance by LDM's and their clients
(a) An LDM should act in compliance with the letter and spirit or these Rules and the
law relating to the securities business and in particular, warn clients where to its
knowledge they may be held to be in violation of provisions such as those on
insider dealing.
(b) In the event of the Exchange finding that any bids or offers placed or about to be
placed are disorderly or malicious, the LDM shall comply with the order of the
Trading Floor Supervisor to set aside or suspend such bids or offers.
(c) An LDM shall make available for inspection to any client who so requested its last
audited balance sheet, its fixed scale of charges and the names of directors or
principals of its business.
(d) An LDM shall comply fully with any inquiries or investigations undertaken by the
Exchange or by any other competent authority.
(e) An LDM, any of its executive directors or employees shall not, without the prior
authority of the Exchange, deal in securities of a listed company where such LDM,
its director or any of its employee is a director or officer.
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3.41.6 Customers' Complaints
(a) Every LDM shall have in operation a procedure for the handling of complaints
from its customers.
(b) All employees of the LDM who deal with customers shall be made aware of these
procedures which must provide forthe complaint to be investigated fully and appropriately by an Executive
Director;
the complaint to be reported to the Exchange if not settled within seven days
of receipt;
the notification to the complainant of his right to utilise the Council's
shareholders complaints procedure.
(c) A written record of all complaints made by clients shall be maintained by each
LDM.
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CHAPTER FOUR
4.0 LISTING RULES FOR THE MAIN INVESTMENT
MARKET SEGMENT
4.1
GENERAL
4.1.1
PRELIMINARY
All applicants for listing are required to be of a certain minimum size, have a
record of trading of adequate duration under their present management and
set out in a formal prospectus sufficient information about their history,
prospects and financial conditions to form a reliable basis for market
evaluation and that investors are treated with proper consideration at all times
by company boards even though the public may only represent a minority of
the shareholders.
4.1.2
The Council shall not approve a prospectus unless(a) it contains all such information as investors and their professional
advisers would reasonably require and reasonably expect to find there for
the purpose of making an informed assessment of :
(i)
the assets and liabilities, financial position, profits and losses and
prospects of the Issuer of the securities, and
(ii)
the rights attaching to those securities, and
(b) it contains in addition such other information and particulars and complies
with such other requirements prescribed or as may be prescribed by
regulations made under the Capital Markets and Securities Act, 1994.
4.2
PROCEDURE
4.2.1
Approval of the Council
No securities shall be admitted for listing without a written approval of the
Council.
4.2.2
Sponsorship of Application for Listing
(a) An applicant for listing shall appoint an LDM of the Exchange to sponsor
its application.
(b) The Sponsoring Member must ensure that the Council is made aware of
all information which should be brought to its attention.
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(c) The Sponsoring Member shall be responsible for the lodging of, any
documents that are required to be submitted with the application for
listing, ensuring that they fully comply with these Rules.
(d) A Sponsoring Member shall during all times it acts in that capacity satisfy
itself that the directors of an Issuer(i)
can be expected to prepare and publish all information necessary
for an informed market to take place in the company's securities;
(ii)
appreciate the nature of the responsibilities they will be
undertaking as directors of a listed company; and
(e) All matters arising in connection with an application for listing shall be
channelled through the Sponsoring Member.
(f) In addition to maintain a Sponsoring Member at the time of application for
listing, a Sponsoring Member is also required(i)
at any time if after a breach of these Rules the Council requires a
Sponsoring Member to be appointed by the Issuer to give advice
on the application of the Rules; or
(ii)
whenever a Sponsoring Member is required by the Rules to report
to the Council in relation to any transaction or matter.
(g) On application for a listing and if listing is successful during the life of
listing the Issuer shall inform the Council in writing immediately upon
change of a Sponsoring Member and give reasons thereof
(h) It shall be the duty of a Sponsoring Member for a new applicant to-
4.2.3
(i)
take all reasonable steps to satisfy itself that the Issuer has
complied with all the relevant conditions for listing and other
relevant requirements of the Rules and must ensure that the
Issuer is guided and advised as to the application of the Rules.
(ii)
confirm to the Council in writing that it has obtained written
confirmation from the applicant that its directors have established
procedures which provide a reasonable basis for them to make
proper judgements as to the financial position and prospects of
the Issuer and its group and that it is satisfied that this
confirmation by the Issuer has been given after due and careful
enquiry by the Issuer.
Application for Listing
(a) An application for listing of securities at the Exchange shall be made to
the Chief Executive in the form of Appendix 2 to these Rules.
40
(b) The application shall be accompanied by a certificate from the LDM
sponsoring the application.
(c) The Chief Executive shall place before the Council an application for
listing as well as recommendations thereon for the decision of the Council
which shall be final.
4.2.4
Documents to be submitted With an Application for Listing
The following documents shall be submitted to the Chief Executive by the
Sponsoring Member to the issue together with an application for listing;
(a) Letter to the Chief Executive from the company's Counsel confirming that
the applicant is duly constituted as required by Rule 4.6(a) of these Rules;
(b) Letter to the Council from the Sponsoring Member confirming that the
applicant shall comply with these Rules and conditions that the Council
shall deem appropriate;
(c) Three copies of the latest draft of the prospectus to be issued and
subsequently three copies of any subsequent drafts forthwith marked up to
show changes from the draft first submitted;
(d) Ten copies of the applicant's audited accounts for the previous three years
(two years for the second tier)- or for all previous years if the Issuer has
been incorporated for less than such period;
(e) Ten copies of the applicant's memorandum and articles of association
(and of any alterations which are proposed to be made to them prior to
listing);
(f) Details of the existing and intended distribution of the applicant's ordinary
shares (including particulars of any beneficial owners of 5% or more of
the ordinary shares);
(g) A copy of all required authorisations with respect to submission for
approval by the Council and publication of any prospectus and to the
changes in the Issuer's structure;
(h) Where applicable, a copy of the proposed underwriting agreements and
contracts, proposed agreements with securities exchanges for listing of
the securities to be offered (where appropriate), proposed agreements or
contracts with a Company Registrar; and
(i) With respect to the public distribution of debt securities, a copy of the
proposed trustee agreement and a proposed contract with a guarantor
(where applicable).
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4.3
BASIC CONDITIONS TO BE FULFILLED BY AN APPLICANT
An applicant for listing must comply with the following requirements:
(a) Issuer to be duly constituted
The Issuer must be duly incorporated as a public company under the law of
Tanzania and it must be in conformity with that law and its memorandum and
articles of association and must under that law be permitted to issue shares to the
public.
(b) Minimum Paid Up Capital
An applicant at the time of listing must have paid up capital at least TZS. 500
million.
(c) Status of the Securities
The securities for which listing is sought must be issued in conformity with the
laws of Tanzania and in conformity with the Issuer's memorandum and articles of
association or equivalent documents and all authorizations needed for their
creation and issue under such law or documents must have been duly obtained;
(d) Minimum Value of Securities to be listed
(i)
An applicant must list securities with the value of at least TZS 2 billion.
(ii)
This requirement shall not apply in the case of further issues of securities
of a class which are already listed.
(iii)
However, the Council may admit securities of a lower value to listing
provided that they are satisfied that adequate marketability of the
securities can be expected.
(e) Transferability of Securities
The securities for which listing is sought must be freely transferable. In
exceptional circumstances approved by the Council a company may take power to
disapprove the transfer of shares provided that such powers do not disturb the
market.
(f) A Company's Period of Existence
(i)
A company must have published or filed annual accounts covering a
period of three years preceding application for listing.
(ii)
In exceptional cases, the Council may accept a shorter period if that is
desirable in the interests of the company or of investors and the Council is
satisfied that investors will have the necessary information available to
arrive at an informed judgement on the company and the securities for
which listing is sought.
42
(iii)
The Council may accept a shorter period if for instance the company,
although newly established has acquired a business (or businesses) which
satisfies the three year trading record requirement under a management
which will be continuing to manage the business subsequent to the
acquisition by the company.
(g) Financial Information
(i)
The annual accounts must have been drawn up in accordance with the
Companies Act, 2002 and must be prepared and independently audited in
accordance with the standards regarded by the Council as appropriate for
companies of international standing and repute.
(ii)
Indication of compliance with this requirement would be accounts
prepared, in all material respects, in accordance with Tanzania Financial
Reporting Standards or other standards as may be prescribed by NBAA
and Auditing Guidelines published by the National Board of Accountants
and Auditors both of which incorporate International Accounting
Standards.
(iii)
The auditors must have reported on the accounts without any qualification
which in the opinion of the Council is material for the purposes of listing.
(h) Working Capital
(i)
The directors of the applicant must ensure that the working capital
available to the group is sufficient.
(ii)
Where working capital is not sufficient, the Council may accept an
application for the listing of further securities of a class already listed
provided the directors of the Issuer demonstrate satisfactory proposals to
provide the additional working capital thought by them to be necessary.
(i) Profit Forecasts
(i)
In respect of an application for listing where a prospectus is required, any
published profit forecast made by an applicant in respect of a period for
which audited annual accounts have not yet been published must have
had its accounting policies and calculations examined and reported upon
by the reporting accountants; and
(ii)
the Sponsoring Member must have satisfied itself as to whether the
forecast has been by the directors after due and careful enquiry.
(j) Overseas Listings
Where a new applicant already has securities listed on an overseas stock
exchange, it must be in compliance with the requirements of that Exchange.
43
(k) Conflict of Interest
(i)
Where a company has a relationship with a substantial shareholder who
could result in a conflict of interest between its obligations towards that
shareholder and its duties to the general body of shareholders, the conflict
could render the company unsuitable for listing.
(ii)
In this Rule substantial shareholder means any shareholder entitled to
exercise or control the exercise of 30% or more of the voting power at
general meetings of the company or one which is in a position to control
the composition of a majority of the board of directors of the company.
(l) Payments other than in cash
Where any fee or other remuneration or consideration is to be paid or given to any
director, officer, technical adviser or promoter otherwise than in cash, the Council
reserves the right to reject any application for listing of the company's securities.
In case of doubt, the Chief Executive should be consulted as soon as possible.
(m) Distribution of Shares
(i)
At least 25%, being not less than 1 million shares, (10% being not less
than 500,000 shares, for the second tier) of any class of securities must,
not later than the time of admission to listing, be in the hands of the public
(i.e. persons who are not associated with the directors or major
shareholders);and
(ii)
the company must have at least 1000 shareholders (300 for the second
tier).
Provided that exceptionally, a lower percentage and /or a fewer number of shares
may be accepted by the Council where the amount of securities of the same class
and the extent of their distribution would enable the market to operate properly.
(n) Fully Paid Up Shares
Shares must be fully paid up prior to their admission for listing, with the exceptions
of right issues which shall be fully paid within 3 months of listing.
(o) Goodwill
(i)
Where a company is dependent for a significant part of its assets or profits
on intangible property rights or on contracts or concessions with or from
third parties, the prospectus must make full disclosure of the terms of such
rights or concessions (including all provisions relating to their termination
or renewal) so as to enable investors to make an informed judgement of
the value of the securities of the company.
(ii)
If, prior to the admission of a company to listing, the company has
engaged in transactions or arrangements which have had the effect of
enhancing the value or extent of intangible assets shown or reflected in
the financial statements of the company, the Council may, if it considers
44
that this might prejudice the interests of investors treat this as rendering
the company unsuitable for listing.
(p) Memorandum and Articles
Provisions of the memorandum and articles of association of the applicant must
comply with the requirements set out in appendix 6.
(q) Listing of Securities of the Same Class
Where the application for listing is made in respect of any class of security(i)
if none of the securities of that class are already listed the application must
relate to all securities of that class issued or proposed to be issued;
(ii)
if some of the securities of that class are already listed the application
must relate to all further securities of that class issued or proposed to be
issued,
listing must be sought for all further issues of a class of securities already listed
not more than one month after allotment.
(r) Warrants or Options to Subscribe
(i)
In the absence of exceptional circumstances, the issue of options or
warrants to subscribe equity must be limited to an amount equal to 10% of
the issued equity capital at the time the warrants or options are issued.
Employee's share schemes shall not be taken into account for the purpose
of this limit.
(ii)
Where an application for listing is made for options or warrants to
subscribe, the terms of issue must be such that the unit of dealing
(whether trading separately) is an option or warrant to subscribe for one
share.
(iii)
Where the terms of the subscription rights change (e.g on a capitalisation
issue), the Sponsoring Member must ensure that the officially published
quotations continued to be based on the right to subscribe for one share.
(iv)
The terms for the exercise for options or warrants to subscribe must not be
capable of variation or suspension at the discretion of the Issuer or of its
directors (though they may contain specific arrangements for variation in
the subscription price or number or shares to take account of alterations to
the share capital of the company).
(s) Options or Warrants not accompanying other securities
(i)
In general, where application is made for listing of
subscribe or purchase securities, not being
accompanied by other securities, the Council
requirements as would apply to the securities
purchased.
45
options or warrants to
options or warrants
will apply the same
to be subscribed or
(ii)
However, where such an application is contemplated, the Chief Executive
should be consulted at an early date as to the requirements which will
apply.
(t) Exchangeable or Convertible Securities Warrants or Options
(a) Securities convertible or exchangeable into other class of securities or
options or warrants to subscribe or purchase such other class may be
admitted to listing only if that other class of securities is (or will become at the
same time):(i)
a class of listed securities ; or
(ii)
a class of securities listed or traded on another regulated, regularly
operating, and recognized open market.
(b) However, the Council may admit such securities, options or warrants to listing
in other circumstance if they are satisfied that holders have the necessary
information available to form an opinion concerning the value of the
underlying securities to which such securities, options or warrants relate.
(u) Minimum Number of Shareholders
The company must have at least 1000 shareholders.
Provided that exceptionally, a fewer number of shareholders may be accepted by
the Council where the amount of securities of the same class and the extent of
their distribution would enable the market to operate properly.
(v) Audit Committee
The applicant company must have in place an Audit Committee established as per
the CMSA Guidelines on Corporate Governance for Listed Companies.
4.4
LISTING OF PREFERENCE SHARES
4.4.1
A company applying for a listing of preference shares must meet the following
criteria:(a) must already have obtained a listing of its ordinary shares;
(b) must offer at least 1,000,000 issued preference shares of the class to be
listed. Further issues of shares of a class already listed are not subject to
these limits;
(c) must ensure that the total amount of preference shares of the company
must not exceed 100% of shareholders’ funds less intangible assets;
(d) must enter into a contract with the Exchange on such terms as the
Exchange may require for the protection of shareholders.
46
4.4.2
Provided that sub-clauses (a) and (c) shall not be deemed to exclude an
application for the listing of preference shares in circumstances where the
securities in question are unconditionally and irrevocably guaranteed by the
Government.
4.4.3
Provided further that the Council where in its opinion such a course of action
may be justified may allow, on such terms and conditions as it deems
appropriate, a listing of preference shares(a) without prior listing of ordinary shares and/or
(b) notwithstanding the fact that the gearing ratio of preference shares to
ordinary shareholders funds less intangible assets, exceeds 100%.
4.5
PROVISIONS RELATING TO PROSPECTUSES
4.5.1
Publication of Prospectus
All new applicants are required to publish a prospectus. A prospectus will be required
to be published for every subsequent issue unless the Council, because of the special
nature of the issue, grants a dispensation from such a requirement on the grounds that
there is no benefit to the existing shareholders or the general public in requiring a
prospectus, e.g in the case of a bonus issue, conversion of loan stock or capital
reorganization.
4.5.2
Approval of Prospectus Prior to Publication
A prospectus must not be published until it has received the formal approval of the
Authority in its final form.
4.5.3
Requirements as to Prospectus
The prospectus must comply with the requirements of the Companies Ordinance and
those of the Authority as well as the further requirements set out in Appendix 7.
4.6 OTHER REQUIREMENTS
4.6.1
Requirements of the Council
4.6.1.1 Prior to a listing becoming effective, the Chief Executive must have confirmed
to the Council that all requirements of the Council relating to the prospectus
and the issue of securities for which listing is sought have been fulfilled by an
applicant.
4.6.1.2 The Registrar of the applicant is situated within Tanzania.
4.6.1.3 Furthermore, the applicant’s Reporting Accountants and Auditor are
independent of each other.
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4.6.2
Listing Undertaking
Prior to a listing becoming effective, the applicant must have entered into a Listing
Undertaking in the form set out in Appendix 3 which undertaking shall be delivered to
the Exchange.
4.6.3
Listing Fees
An applicant for listing of securities at the Exchange shall pay such application, initial
and annual listing fees as shall be laid down by the Council from time to time.
4.7
ADMISSION TO LISTING
4.7.1
Timing of Admission
Admission of any securities to listing shall become effective after all procedures and
substantive requirements have been complied with and an official notice to that effect
has been issued by the Council.
4.7.2
Continuing Obligations to be observed
An Issuer admitted to listing shall comply with all continuing obligations indicated in the
Letter of Undertaking annexed as Appendix 8 to these Rules as well as such
requirements as may be determined by the Council from time to time.
4.8
LISTING ON OTHER STOCK EXCHANGES
An Issuer, admitted to listing at the DSE, shall seek the permission of the Council before
applying to list on another stock exchange.
4.9
SUSPENSION AND CANCELLATION OF LISTING
4.9.1
Suspension
4.9.1.1 The Council may at any time and in such circumstances as it deems fit
suspend or cancel a listing. The Council will not hesitate to do so in order to
protect investors and to ensure and an orderly market.
4.9.1.2 Suspension may be either with or without the request of the Issuer. Any such
request must be made to the Chief Executive by the Issuer’s Sponsoring
Member or in exceptional cases by the Issuer itself.
4.9.1.3 Where listing has been suspended, the procedure for lifting the suspension will
depend on the circumstances and the Council reserve the right to impose such
conditions as they consider appropriate.
48
4.9.2
Cancellation
The continuation of a suspension for a prolonged period without the Issuer taking
adequate action to obtain restoration of listing Is likely to lead to the Council cancelling
the listing. There may also be cases where the listing should be cancelled without
suspension intervening (for example a significant change in the company rendering it
unsuitable for listing).
4.6.3
Referrals
4.9.3.1 Resolution of Issues
(a) All matters concerning listings should be addressed by a Sponsoring
Member to the Chief Executive provided that when a matter has to be
determined by the Council, the Sponsoring Member may be accompanied
by the representatives of the Issuer and other advisers any of whom may
address the Council.
(b)
The Council reserves the right to limit the number of persons involved in
such hearings.
49
CHAPTER FIVE
LISTING RULES FOR THE ENTERPRISE GROWTH
MARKET SEGMENT (EGM)
5.0
PRELIMINARY
All applicants for listing are required to be of a certain minimum size, have a record of trading of
adequate duration under their present management and set out in a formal prospectus
sufficient information about their history, prospects and financial conditions to form a reliable
basis for market evaluation and that investors are treated with proper consideration at all times
by company boards even though the public may only represent a minority of the shareholders.
5.1
The Council shall not approve a prospectus unless:
a)
b)
5.2
It contains all such information as investors and their professional advisers would
reasonably require and reasonably expect to find there for the purpose of making an
informed assessment of:
(i)
The assets and liabilities, financial position, profits and losses and prospects of
the Issuer of the securities, and
(ii)
The rights attaching to those securities, and
It contains in addition such other information and particulars and complies with such
other requirements prescribed or as may be prescribed by regulations made under the
Capital Markets and Securities Act, 1994.
APPROVAL OF THE COUNCIL
No securities shall be admitted for listing without a written approval of the Council.
5.3
SPONSORSHIP OF APPLICATION FOR LISTING
An applicant for listing on EGMs shall appoint a Nominated Advisor. The Nominated Advisor
shall perform all the following duties:
a) An applicant for listing on EGMs shall appoint a Nominated Advisor to sponsor its
application. The Nominated Advisor must ensure that the Council is made aware of all
information which should be brought to its attention. The Nominated Advisor shall be
responsible for the lodging of, any documents that are required to be submitted with the
application for listing, ensuring that they fully comply with these Rules.
b) A Nominated Advisor shall during all times it acts in that capacity to satisfy itself that the
directors of an Issuer-
50
i)
Can be expected to prepare and publish all information necessary for an informed
market to take place in the company's securities;
ii)
Appreciate the nature of the responsibilities they will be undertaking as directors of
a listed company; and
c) All matters arising in connection with an application for listing shall be channelled through
the Nominated Advisor.
d) In addition to maintain a Nominated Advisor at the time of application for listing, a
Nominated Advisor is also required:
(i)
At any time if after a breach of these Rules the Council requires a Nominated
Advisor to be appointed by the Issuer to give advice on the application of the Rules;
or
(ii)
Whenever a Nominated Advisor is required by the Rules to report to the Council in
relation to any transaction or matter.
e) On application for a listing and if listing is successful during the life of listing the Issuer shall
inform the Council in writing immediately upon change of a Nominated Advisor and give
reasons thereof
f)
It shall be the duty of a Nominated Advisor for a new applicant to;
(iii)
Take all reasonable steps to satisfy itself that the Issuer has complied with all the
relevant conditions for listing and other relevant requirements of the Rules and must
ensure that the Issuer is guided and advised as to the application of the Rules.
(iv)
Confirm to the Council in writing that it has obtained written confirmation from the
applicant that its directors have established procedures which provide a reasonable
basis for them to make proper judgements as to the financial position and prospects
of the Issuer and its group and that it is satisfied that this confirmation by the Issuer
has been given after due and careful enquiry by the Issuer.
g) Appraise the DSE on the readiness of the Issuer to list on the EGM;
h) Either on its own or in conjunction with others, appraise the Issuer’s project for the
purposes of seeking listing;
i)
Certify/Confirm to the DSE that the Issuer is a viable investment;
j)
Ensure that the price of Issuer’s shares is objectively determined;
k) Undertake to continue advising the Issuer as long as the Issuer remains listed on EGMs;
and
l)
Ensures that the Issuer complies with post-listing continuous obligations.
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5.4
5.5
APPLICATION FOR LISTING
5.4.1
An application for listing of securities at the Exchange shall be made to the Chief
Executive in the form of Appendix 2 to these Rules. The application shall be
accompanied by a certificate from the Nominated Advisor sponsoring the application.
5.4.2
The Chief Executive shall place before the Council an application for listing as well as
recommendations thereon for the decision of the Council which shall be final.
DOCUMENTS TO BE SUBMITTED WITH AN APPLICATION FOR LISTING
When applying for listing in the EGMs the Nominated Advisor shall furnish the Exchange with
the following documents together with an application for listing:
(a)
Letter to the Chief Executive from the company's Legal Counsel confirming that
the applicant is duly constituted as required by Rule 5.6(a) of these Rules;
(b)
Three copies of the latest draft of the prospectus to be issued and subsequently
three copies of any subsequent drafts forthwith marked up to show changes from
the draft first submitted;
(c)
Ten copies of the applicant's memorandum and articles of association (and of any
alterations which are proposed to be made to them prior to listing);
(d)
Details of the existing and intended distribution of the applicant's ordinary shares
(including particulars of any beneficial owners of 5% or more of the ordinary
shares);
(e)
A copy of all required authorisations with respect to submission for approval by the
Council and publication of any prospectus and to the changes in the Issuer's
structure;
(f)
Where applicable, a copy of the proposed underwriting agreements and contracts,
proposed agreements with securities exchanges for listing of the securities to be
offered (where appropriate), proposed agreements or contracts with a Company
Registrar; and
(g)
With respect to the public distribution of debt securities, a copy of the proposed
trustee agreement and a proposed contract with a guarantor (where applicable).
(h)
Ten copies of an Agreement between the Issuer and Nominated Advisor as per the
guidance provided under Appendix 16 to these Rules;
(i)
Letter to the Council from the Nominated Advisor confirming that the applicant
shall comply with these Rules and conditions that the Council shall deem
appropriate;
(j)
Ten copies of the Issuer’s technical feasibility study report; and
(k)
Ten copies of the Issuer’s business plan which is for five years.
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5.6
BASIC CONDITIONS TO BE FULFILLED BY AN APPLICANT
An applicant for listing must comply with the following requirements:
5.6.1
Issuer to be duly constituted
The Issuer must be duly incorporated as a public company under the laws of Tanzania
and it must be in conformity with its memorandum and articles of association and must
under that law be permitted to issue shares (or other relevant securities) to the public.
5.6.2
Minimum Paid Up Capital
An applicant at the time of listing must have paid up capital of at least TZS 200 million.
5.6.3
Status of the Securities
The securities for which listing is sought must be issued in conformity with the laws of
Tanzania and in conformity with the Issuer's memorandum and articles of association
or equivalent documents and all authorizations needed for their creation and issue
under such law or documents must have been duly obtained.
5.6.4
Minimum Value of Securities to be listed
(a) An applicant must list securities with the value of at least TZS 200 million.
(b) The requirement under this rule shall not apply in the case of further issues of
securities of a class which are already listed.
(c) The Council may admit securities of a lower value to listing provided that they
are satisfied that adequate marketability of the securities can be expected.
5.6.5
Transferability of Securities
The securities for which listing is sought must be freely transferable. In exceptional
circumstances approved by the Council a company may take power to disapprove the
transfer of shares provided that such powers do not disturb the market.
5.6.6
A Company's Period of Existence
(a) A company applying for listing under the EGMs shall not be required to publish or
file annual accounts covering a period of three years preceding application for
listing.
(b) However, a company must have a five year business plan and a technical
feasibility study report to assist investors to have the necessary information
53
available to arrive at an informed judgement on the company and the securities for
which listing is sought.
5.6.7
Financial Information
(a) The annual Financial Statements as well as Interim Financial Statements must
have been drawn up in accordance with the Companies Act 2002 and must be
prepared in accordance with the International Financial Reporting Standards and
independently audited by the auditor registered by the National Board of
Accountants and Auditors (NBAA).
(b) The auditors must have reported on the financial statements without any
qualification which in the opinion of the Council is material for the purposes of
listing.
5.6.8
Working Capital
(a) The directors of the applicant must ensure that the working capital available to the
group is sufficient.
(b) Where working capital is not sufficient, the Council may accept an application for
the listing of further securities of a class already listed provided the directors of the
Issuer demonstrate satisfactory proposals to provide the additional working capital
thought by them to be necessary.
5.6.9
Profit Forecasts
In respect of an application for listing where a prospectus is required, any published
profit forecast made by an applicant in respect of a period for which audited annual
accounts have not yet been published must have had its accounting policies and
calculations examined and reported upon by the reporting accountants, and the
Sponsoring Member must have satisfied itself as to whether the forecast has been
prepared by the directors after due and careful enquiry.
5.6.10 Overseas Listings
Where a new applicant already has securities listed on an overseas stock exchange, it
must be in compliance with the requirements of that Exchange.
5.6.11 Conflict of Interest
(a) Where a company has a relationship with a substantial shareholder who could
result in a conflict of interest between its obligations towards that shareholder and
its duties to the general body of shareholders, the conflict could render the
company unsuitable for listing.
(b) In this rule, substantial shareholder means any shareholder entitled to exercise or
control the exercise of 30% or more of the voting power at general meetings of the
company or one which is in a position to control the composition of a majority of
the board of directors of the company.
54
5.6.12 Payments other than in cash
Where any fee or other remuneration or consideration is to be paid or given to any
director, officer, technical adviser or promoter otherwise than in cash, the Council
reserves the right to reject any application for listing of the company's securities. In
case of doubt, the Chief Executive should be consulted as soon as possible.
5.6.13 Distribution of Shares
(a) At least 20% being not less than 500,000 shares of any class of securities must,
not later than the time of admission to listing, be in the hands of the public (i.e.,
persons who are not associated with the directors or major shareholders).
(b) Provided that exceptionally, a lower percentage may be accepted by the Council
where the amount of securities of the same class and the extent of their
distribution would enable the market to operate properly.
5.6.14 Minimum Number of Shareholders
The company must have at least 100 shareholders. Provided that exceptionally, a
fewer number of shareholders may be accepted by the Council where the amount of
securities of the same class and the extent of their distribution would enable the market
to operate properly.
5.6.15 Fully Paid Up Shares
Shares must be fully paid up prior to their admission for listing, with the exceptions of
right issues which shall be fully paid within 3 months of listing.
5.6.16 Goodwill
(a) Where a company is dependent for a significant part of its assets or profits on
intangible property rights or on contracts or concessions with or from third parties,
the prospectus must make full disclosure of the terms of such rights or
concessions (including all provisions relating to their termination or renewal) so as
to enable investors to make an informed judgement of the value of the securities of
the company.
(b) If, prior to the admission of a company to listing, the company has engaged in
transactions or arrangements which have had the effect of enhancing the value or
extent of intangible assets shown or reflected in the financial statements of the
company, the Council may, if it considers that this might prejudice the interests of
investors treat this as rendering the company unsuitable for listing.
55
5.6.17 Memorandum and Articles of Association
Provisions of the memorandum and articles of association of the applicant must
comply with the requirements set out in Appendix 6.
5.6.18 Listing of Securities of the Same Class
Where the application for listing is made in respect of any class of security(a) if none of the securities of that class are already listed the application must relate
to all securities of that class issued or proposed to be issued;
(b) if some of the securities of that class are already listed the application must relate
to all further securities of that class issued or proposed to be issued,
and listing must be sought for all further issues of a class of securities already listed
not more than one month after allotment.
5.6.19 Warrants or Options to Subscribe
(a) In the absence of exceptional circumstances, the issue of options or warrants to
subscribe equity must be limited to an amount equal to 10% of the issued equity
capital at the time the warrants or options are issued.
(b) Employee's share schemes shall not be taken into account for the purpose of this
limit.
(c) Where an application for listing is made for options or warrants to subscribe, the
terms of issue must be such that the unit of dealing (whether trading separately) is
an option or warrant to subscribe for one share.
(d) Where the terms of the subscription rights change (e.g on a capitalisation issue),
the Sponsoring Member must ensure that the officially published quotations
continued to be based on the right to subscribe for one share.
(e) The terms for the exercise for options or warrants to subscribe must not be
capable of variation or suspension at the discretion of the Issuer or of its directors
(though they may contain specific arrangements for variation in the subscription
price or number or shares to take account of alterations to the share capital of the
company).
5.6.20 Options or Warrants not accompanying other securities
(a) In general, where application is made for listing of options or warrants to subscribe
or purchase securities, not being options or warrants accompanied by other
securities, the Council will apply the same requirements as would apply to the
securities to be subscribed or purchased.
56
(b) Where such an application under paragraph (a) is contemplated, the Chief
Executive should be consulted at an early date as to the requirements which will
apply.
5.6.21 Exchangeable or Convertible Securities Warrants or Options
(a) Securities convertible or exchangeable into other class of securities or options or
warrants to subscribe or purchase such other class may be admitted to listing
only if that other class of securities is (or will become at the same time(i)
a class of listed securities; or
(ii)
a class of securities listed or traded on another regulated, regularly
operating, and recognized open market.
(b) The Council may admit such securities, options or warrants to listing in other
circumstance if they are satisfied that holders have the necessary information
available to form an opinion concerning the value of the underlying securities to
which such securities, options or warrants relate.
5.6.22 Period Moratorium
In case a company applying for listing under the EGMs has less than three years track
record, its promoters shall be locked-in (not be allowed to exit) for a period of three
years from the time of listing.
5.6.23 Net Tangible Assets
The company shall have at least 50% of its net assets situated within Tanzania.
5.6.24 Certificate of Comfort from relevant Regulators
Companies intending to list under the EGMs shall obtain comfort letters from
institutions regulating their operations.
5.6.25 Audit Committee
The applicant company must have in place an Audit Committee established as per the
CMSA Guidelines on Corporate Governance for Public and Listed Companies.
5.7
LISTING OF PREFERENCE SHARES
5.7.1
A company applying for a listing of preference shares must meet the following criteria:
(a) have had obtained a listing of its ordinary shares;
57
(b) offer at least 1,000,000 issued preference shares of the class to be listed but further
issues of shares of a class already listed are not subject to these limits;
(c) ensure that the total amount of preference shares of the company must not exceed
100% of shareholders’ funds less intangible assets;
(d) enter into a contract with the Exchange on such terms as the Exchange may require
for the protection of shareholders.
5.7.2
Paragraphs (a) and (c) shall not be deemed to exclude an application for the listing of
preference shares in circumstances where the securities in question are
unconditionally and irrevocably guaranteed by the Government.
5.7.3
Where in the opinion of the Council such a course of action may be justified, the
Council may allow, on such terms and conditions as it deems appropriate, a listing of
preference shares-
(a) without prior listing of ordinary shares and/or;
(b) notwithstanding the fact that the gearing ratio of preference shares to ordinary
shareholders funds less intangible assets, exceeds 100%.
5.8
PROVISIONS RELATING TO PROSPECTUSES
5.8.1
Publication of Prospectus
(a) All new applicants are required to publish a prospectus.
(b) A prospectus will be required to be published for every subsequent issue unless
the Council, because of the special nature of the issue, grants a dispensation from
such a requirement on the grounds that there is no benefit to the existing
shareholders or the general public in requiring a prospectus, e.g. in the case of a
bonus issue, conversion of loan stock or capital reorganization.
5.8.2
Nature of the Prospectus
The prospectus must comply with the requirements of the Companies Act and those of
the Authority as well as the further requirements set out in Appendix 7.
5.8.3
Approval of Prospectus prior to Publication
A prospectus must not be published until it has received the formal approval of the Authority in
its final form.
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5.9
OTHER REQUIREMENTS
5.9.1
Requirements of the Council
(a) Prior to a listing becoming effective, the Chief Executive must have confirmed to
the Council that all requirements of the Council relating to the prospectus and the
issue of securities for which listing is sought have been fulfilled by an applicant.
(b) The Registrar of the applicant is situated within Tanzania.
(c) The applicant’s Reporting Accountants and Auditor are independent of each other.
5.9.2
Listing Undertaking
Prior to a listing becoming effective, the applicant must have entered into a Listing
Undertaking in the form set out in Appendix 3 which undertaking shall be delivered to
the Exchange.
5.9.3
LISTING FEES
An applicant for listing of securities at the Exchange shall pay for such application,
initial and annual listing fees as shall be laid down by the Council from time to time.
5.10
ADMISSION TO LISTING
Timing of Admission
Admission of any securities to listing shall become effective after all procedures and
substantive requirements have been complied with and an official notice to that effect has been
issued by the Council.
5.11
CONTINUING OBLIGATIONS
Continuing Obligations to be observed
The Issuer’s Nominated Advisor shall indicate in the Letter of Undertaking annexed as
Appendix 17 to these Rules that it will ensure that the Issuer comply with all continuing
obligations as well as such requirements as may be determined by the Council from time to
time.
5.12
LISTING ON OTHER STOCK EXCHANGES
An Issuer, admitted to listing at the DSE, shall seek the permission of the Council before
applying to list on another Stock Exchange.
5.13
SUSPENSION AND CANCELLATION OF LISTING
5.13.1 Suspension
(a) The Council may at any time and in such circumstances as it deems fit suspend or
cancel a listing. The Council will not hesitate to do so in order to protect investors
and to ensure an orderly market.
59
(b) Suspension may be either with or without the request of the Issuer. Any such
request must be made to the Chief Executive by the Issuer’s Sponsoring Member
or in exceptional cases by the Issuer itself.
(c) Where listing has been suspended, the procedure for lifting the suspension will
depend on the circumstances and the Council reserve the right to impose such
conditions as they consider appropriate.
5.13.2 Cancellation
(a) The continuation of a suspension for a prolonged period without the Issuer taking
adequate action to obtain restoration of listing is likely to lead to the Council
canceling the listing.
(b) There may also be cases where the listing should be cancelled without suspension
intervening (for example a significant change in the company rendering it
unsuitable for listing).
5.14
REFERRALS
Resolution of Issues
(a) All matters concerning listings should be addressed by a Sponsoring Member to the Chief
Executive provided that when a matter has to be determined by the Council, the
Sponsoring Member may be accompanied by the representatives of the Issuer and other
advisers any of whom may address the Council.
(b) The Council reserves the right to limit the number of persons involved in such hearings.
5.15
LISTING FEES
An applicant for listing under the EGMs shall pay listing fees as shown in the table below:
Type of Fee
EGMS
Initial Listing Fees (when a
company comes to the market for
the first time)
0.1% of market capitalization subject to a minimum of TZS 1 million
and a maximum of TZS 10 million.
Additional Listing Fees (payable by
a company already listed when
seeking listing of additional
securities)
0.01% of market capitalization subject to a minimum of TZS 1 million
and a maximum of TZS 10 million.
Annual Listing Fees (payable
annually by all listed companies)
0.025% of market capitalization subject to a minimum of TZS 1 million
and a maximum of TZS 5 million.
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CHAPTER SIX
LISTING RULES FOR DEBT SECURITIES
6.0
BASIC CONDITIONS TO BE FULFILLED BY AN APPLICANT
6.1
Where a listing is sought for debt securities, selected information from previous
sections on equities and the following additional requirements shall be fulfilled:
6.1.1
Aggregate nominal value of the debt securities; if this amount is not fixed a
statement to that effect, together with the nature, number and numbering of
the debt securities and the denominations;
6.1.2
Summary of the rights conferred on the holders thereof, and particulars of the
securities (if any) therefor;
6.1.3
Where debt securities are issued by way of conversion or replacement of debt
securities previously issued, a statement of all material differences between
the securities for the old debt securities and the securities for the new debt
securities, or, if appropriate, a statement that the securities for the new debt is
identical with all security for the old debt securities;
6.1.4
Except in the case of continuous issues, the issue and redemption prices and
nominal interest rate; if several interest rates are provided for, an indication of
the conditions for changes in the rate;
Procedures for the allocation of any other advantages and the method or
calculating such advantages;
6.1.5
6.1.6
Arrangements for the amortisation of the loan, including the repayment
procedures;
6.1.7
Currency of the loan and any currency option; if the loan is denominated in
units of account, the contractual status of such units.
6.2 LISTING OF LOAN SECURITIES
6.2.1
A company applying for a listing of loan securities must meet the following
criteria;
(a) it must have already obtained a listing of its ordinary share capital;
(b) it offers at least Tshs 30 million Issued loan capital of the class to be
listed;
(c) further issues of shares of a class already listed are not subject to these
limits;
(d) its total loan capital does not exceed 100% of shareholders’ funds less
intangible assets;
(e) it enters into a contract with the Exchange on such terms as the
Exchange may require for the protection of bondholders.
61
Provided that paragraphs (a) and (c) shall not be deemed to exclude an
application for the listing of loan securities in circumstances where the
securities in question are unconditionally and irrevocably guaranteed by
the Government.
Provided further that the Council where in its opinion such a course of
action may be justified, may allow, on such terms and conditions as it
deems appropriate, a listing of loan securities(i)
(ii)
(f)
without prior listing of ordinary shares; and/or
notwithstanding the fact that the gearing ratio of total loan-capital
to shareholders funds less intangible assets, exceeds 100%.
Except in the case of continuos issues, an indication of yield. The method
whereby that yield is calculated must be described in a summary form.
(g) Details of any guarantee of or surety for the payment of principal or
interest.
(h) In addition(i)
Names, function, description and head office of the trustee or
other representative of the debt security holders;
(ii)
The main terms of the documents governing such trusteeship or
representation and in particular the conditions under which such
trusteeship or representation may be replaced.
(i)
Summary of clauses subordinating the loan to other debts of the Issuer
already contracted or to be contracted.
(j)
Indication, where necessary, that the subscriptions may be reduced.
(k) Possibility or early closure of the period during which the issue or offer of
securities (except in the case of continuous issues) will remain open after
publication of the prospectus or information memorandum.
6.2.2
Documents to be filed with an application for the listing of Bonds,
Debenture and Loan Stock
(a) The documents which must be filed in support of an application for Bonds,
debentures and Loan Stock shall be similar to those required in support of
an application for ordinary shares as outlined in these Rules, except that
the following additional information should be included:
(i)
full title of issue;
62
(ii)
a certificate or copy of the document constituting the loan capital
including all relevant details;
(iii)
any special legislation under which the debt securities have been
created;
(iv)
details of any assets which may be used as security for the debt;
(b) final repayment date and any earlier repayment dates;
(c) date from which interest becomes payable and the due dates for interest;
(d)
(e) where listing is sought for fixed income securities, particulars of the profits
cover for interest and of the net tangible assets, the interest rate, if not
already indicated above, must be stated.
6.2.3
Where, for any reason, one or more of the documents mentioned herein
cannot be produced a statement to this effect has to be submitted.
6.2.4
Application Procedure
(a) Government and other Legal persons
These requirements apply to debt securities issued by(i)
the Government;
(ii)
other legal persons which are not limited liability companies which
are set up or governed by a special law or pursuant to such law or
those whose debt securities to be issued are unconditionally and
irrevocably guaranteed by Government; and
(iii)
other statutory bodies.
(b) In the case of securities issued by the Government and any body corporate
falling under the description in (i) above, the Council will have regard to
information already available to the public in deciding on the application of
these requirements.
(c) The following documents must be submitted in draft form where appropriate
for approval, at least fourteen days prior to intended publication of the listing
particulars or equivalent offering document:
(i)
four copies of the listing particulars or equivalent offering document,
formal notices and in the case of issues by Issuers falling within
paragraphs (I)(b) and (c) above any other document intended for
publication by the Issuer or on its behalf.
(ii)
Four copies of any application form to purchase or subscribe
securities.
63
(d) in the case of issues other than debt securities issued by Government, the
following documents must also be lodged with the Exchange:
(i)
an application by the Issuer for admission to listing in the form set
out by these Rules signed by a duly authorised official of the
Issuer;
(ii)
an application by the sponsoring member, if any;
(iii)
payment of the appropriate charge for listing and, where relevant,
the annual charge;
(iv)
four copies of the listing particulars or equivalent offering
document satisfying all the requirements for the contents of such
documents one of which must be dated and signed by a duly
authorised official of the Issuer or by his agent or attorney
authorised in writing;
(v)
where any document referred to in paragraph (iv) above is signed
by an agent or attorney, a certified copy of his authority;
(vi)
a copy of any consent, order and/or resolution authorising the
issue.
(e) The contents of the equivalent offering document are set out in Rule 17
below.
(f) The contents of the listing particulars applicable to bodies falling under this
Rule must reflect the general requirements of listing particulars with
modifications and exceptions appropriate to the circumstances.
(g) Where application is made for the admission of securities by the Government
or a body corporate falling under this section and listing particulars are
required, admission will not be granted unless the listing particulars or
equivalent offering document has first been published in the manner referred
to in paragraph (18) below.
(h) Save as permitted by the Listing Committee listing particulars or equivalent
offering document may not be circulated, or made available publicly, unless
they have first been published as required by this section. Circulation is
however permitted of draft listing particulars or equivalent offering document,
clearly marked as such, for the purposes of arranging underwriting.
(i) The minimum requirements regarding publication are as follows:
(i)
where the listing particulars or equivalent offering document are
not published in full in a local daily newspaper, a local newspaper
must carry a formal notice;
64
(ii)
where the listing particulars or equivalent offering document are
published in a newspaper they must be accompanied by a
statement that they are available at specific addresses;
(iii)
a formal notice in a local daily newspaper must state at least the
following:
(aa) the name of the Issuer;
(bb) the amount and title of the securities for which listing is
sought;
(cc) the name of any guarantor of the principal or interest on
such securities;
(dd) in the case of a fixed-income security with a facility to
issue further tranches of the security, the total amount of
the security which could be issued under such an
arrangement; and
(ee) the name of the sponsoring member, if any.
6.2.5
Requirements for contents of offering documents of the Government
Securities
(a) This Rule applies to issues by the Government and sets out the basic
requirements for the contents of offering documents issued by it.
(b) The Council shall have regard to information already available to the
public in deciding on the application of these requirements and shall
require the following:(i)
name of the issue;
(ii)
statement that‘Application has been made to the Council of the Dar es
Salaam Stock Exchange for (the securities which should be
stated) to be admitted to the Official List”.
(iii)
amount and title of the securities for which listing is sought;
(iv)
authority under which the securities are issued;
(v)
names and addresses of the bankers and sponsoring member, if
any;
(vi)
details of the revenue and capital against which the security is
charged and of the revenue cover for interest, if appropriate;
65
6.3
(vii)
terms and conditions of issue for the securities, particulars;
(viii)
the rights conferred as regards income and capital, with
information as to the amount and application of any sinking fund,
any right of the authority to redeem before maturity, any rights of
conversion, or other similar rights and the securities upon which
any loan is charged, if any.
(ix)
In addition to interest payment dates, the dates on which a
balance is struck for the purpose of payment should be stated if
this is included in the condition of issue or other provisions; and
(x)
the price at which and terms upon which the securities have been
issued or agreed to be issued, and whether the same has or has
not been paid up in full. If not paid up in full, particulars of all
payments still to be made with due dates of payment must be
given;
(xi)
That each copy of the offering document must contain an
application form which may be used to apply for the securities to
be offered.
MINIMUM VALUE OF SECURITIES TO BE LISTED
6.3.1
An Applicant must list securities with the value of at least TZS 300 million for
companies falling under the MIMS and TZS150 for companies falling under
EGM.
6.3.2
The requirement under this Rule shall not apply in any case of further issue of
securities of a class which are already listed.
6.3.3
The Council may admit securities of a lower value to list provided that they are
satisfied that adequate marketability of the securities can be expected.
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CHAPTER SEVEN
7.0 TRADING RULES
7.1
GENERAL CONDITIONS
7.1.1
Exchange Dealings
(a) The Exchange does not recognize in its dealings any parties other than
its own LDMs. Every deal transacted on the Exchange therefore,
whether for the account of the LDM effecting it or for the account of the
LDM’s client, shall be executed by the LDM according to the Rules of the
Exchange.
(b) An application to annul a transaction in the Exchange shall not be
accepted by the Council except on a specific allegation of fraud or willful
misrepresentation or upon prima facie evidence of such material mistake
in the deal as in their judgement renders the case one which is fitting for
their adjudication.
7.1.2
Trading Sessions
(a) Trading sessions shall be held on such days and times as the Council
shall from time to time determine by Notice.
(b) The Council of the Exchange will publish a notice on the Trading Floor, at
least two business days before any changes are made to the trading
times for any securities.
(c) Market opening and closing times shall be established by the Exchange
and may be different for each category of listed securities. No
transactions shall be effected before the opening or after the closing
signal.
7.1.3
Trading Restricted To Trading Sessions
All purchases and sales of listed securities must take place using DATES in
accordance with these Rules.
7.1.4
Access To The Trading Floor/Dates
(a) The access to the Trading Floor/DATES is limited to:
(i)
ADRs and Floor Traders;
(ii)
Exchange personnel;
(iii)
Any other person duly authorised by the Chief Executive.
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7.1.5
Instructions from Clients
It is the responsibility of an LDM to ensure that they receive bona fide
instructions from clients and that they have effective procedures for identifying
the persons from whom they take instructions to effect transactions.
7.1.6
Instructions May Be Received From Clients:
(a) Instructions from Clients may be received(i)
Directly on completion of the appropriate Order Form; or
(ii)
By completing the appropriate Order Form but utilizing Financial
Intermediaries; or
(iii)
Through their appointed attorneys agents and in accordance with
the terms set out in the powers of attorney; or
(iv)
In accordance with a Client's Agreement Letter.
(b) In the case of (ii) and (iii) the Exchange has to be informed of the person
authorised to act on behalf of the client.
(c) At no stage shall an LDM offer or bid for securities unless he has a
genuine request by a client in accordance with this Rule. The Market
Official may require any LDM to prove that a genuine request exists and
the LDM shall comply. This Rule does not apply in the case where an
LDM takes a position as principal in accordance with these Rules.
7.2
7.3
OWNERSHIP OF SECURITIES
7.2.1
The ownership of a security together with all its rights and interests in respect
of which the transaction has been effected passes from the seller(s) to the
buyer(s) with effect from the moment of trade execution.
7.2.2
Following the close of the trading session, the Exchange shall pass the
necessary entries in the registers of holders of the relevant securities
maintained under the CDS to reflect the transactions effected during the
trading session.
FUNCTIONS OF THE LDM
7.3.1
The selling LDM will use its best endeavours to sell the listed securities on the
first trading day following the receipt of instructions from its client.
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7.4
7.5
7.3.2
The selling LDM shall be responsible to ensure that its client is the registered
holder of the security by way of verification. It must also ascertain that there is
enough available holdings to be sold and that there is no charge registered
against these holdings in the CDS. If it results that the holdings are not
sufficient to meet the order or that there is a charge against the holdings, the
order will be rejected by the DATS.
7.3.3
The buying LDM shall use its best endeavours to buy the listed securities on
the first trading day following the receipt of instructions from its client.
7.3.4
Both the selling and buying LDMs shall be responsible to collect the sufficient
details of their clients to enable the production of the Client Contract Notes.
This information must be supplied before the trade execution. In the event that
sufficient details of the client are not available, the order will not be validated
by the DATS.
SHORT SELLING
7.4.1
Short sales are prohibited. A short sale is a sale of a security when the seller
does not own the security, or have an exercisable right of sale.
7.4.2
The DATS will be linked to the CDS to determine the existence of securities
before trading is executed.
DUTIES TO THE CLIENT
7.5.1
An LDM must submit client bids and offers to the trading process in a timely
manner and for each security, in the order in which they were received.
7.5.2
An LDM must give priority to client bids and offers over bids and offers placed
by an LDM acting as a principal.
7.5.3
An LDM must stamp client orders.
7.5.4
An LDM may be offered by the Exchange to explain any of its actions.
7.6 DISPUTES AND IRREGULAR DEALS
7.6.1
The settlement of disputes concerning the terms of transactions shall be
decided by the Market Official and his decisions shall be final.
7.6.2
Any deal which in the opinion of the Market Official is irregular or is in
contravention of the Rules of the Exchange or the CMS Act and its
Regulations shall be reported immediately to the Chief Executive.
7.6.3
Any deal executed through the DATS is binding on both parties unless
reversed by the Chief Executive within the settlement period following an
69
appeal. If after an investigation an error is detected, the Chief Executive may
take any action which he deems fit including the cancellation of the trade.
7.7 TRADING DELAYS AND HALTS
The Chief Executive has the authority to take such decisions as may be required to delay
the opening of trading in any listed security in order to assist in the orderly opening or
trading of such security.
7.8 “FIRM ORDERS "MY ORDER IS MY BOND"
7.8.1
All recorded bids and offers shall be firm and cannot be cancelled except where
bids and offers have been overtaken by new market events and developments or
as shall be determined by these Rules.
7.8.2
However, a bid or offer posted may be cancelled anytime as long as it has not
been matched provided a cancellation is subject of instructions from the client.
7.9 SYSTEM FAILURE
7.9.1
Failure in any of the systems installed in the Exchange for trading purposes shall
be immediately reported to the Market Official who shall take the necessary action
to suspend or close trading or to operate under a manual system as directed by
the Chief Executive.
7.9.2
Every effort should be made in order to resume the orderly conduct of trading as
soon as possible.
7.9.3
Under no circumstances shall the Exchange be responsible for damages arising
from any such failure, error or defect in the equipment.
7.10 RECORDS AND REPORTS
All trades executed on the DATS shall be recorded in the form prescribed by the Exchange
from time to time.
7.11 TRADING PROCEDURES
7.11.1 The purpose of this section is to give a detailed account of the trading
procedures.
7.11.2 Trading Sessions
(a) The Trading Sessions shall be conducted between 10:00 a.m. and 12 noon each
business day except where varied according to notices published by the
Exchange.
(b) Securities will be traded continuously every business day except as notified by the
Exchange.
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7.11.3 Trading Hours
(a) The start of trading shall commence at exactly 10:00 a.m.
(b) Trading session of the Exchange shall be supervised by the Market Official or by
any Exchange Official permanently or temporarily appointed by the Chief
Executive to carry out those duties.
7.12ATTENDANCE AT TRADING SESSIONS
7.12.1 Each LDM shall have an ADR or Floor Trader present for the duration of each
trading session.
7.12.2 Any ADR may attend a trading session.
7.12.3 No unauthorized person shall be permitted on the Trading Floor or to access the
DATS.
7.12.4 The Chief Executive shall have the discretion to refuse access of any person to
the Trading Floor or DATES except for the Authority’s supervisory or authorized
staff.
7.12.5 Trading may commence provided a minimum of three LDMs are represented.
7.13 PERSONS PERMITTED TO DEAL
7.13.1 Only ADR and Floor Traders are permitted to deal on DATS.
7.13.2 LDMs shall ensure that their ADRs or Floor Traders comply at all times with the
Trading Rules, any directives from time to time made by the Exchange and other
Rules of the Exchange. Any failure to comply with any of such Rules shall render
the approval of the ADR liable to immediate revocation without notice and render
the Member liable to disciplinary proceedings for failure to ensure compliance.
7.13.3 An ADR or Floor Traders shall not transact any business for any LDM other than
the one in respect of which approval has been sought and granted by the Council.
7.14 TRADING AS PRINCIPAL
7.14.1 An LDM, through an ADR, may trade as a principal, whether the counterpart is
trading as a principal or as an agent for a client.
7.14.2 An LDM may trade, through its ADR, in accordance with the Trading Rules, as a
principal, as the counterpart to an order in which the LDM, is acting as agent to a
71
client, provided that the LDM declares the same, in advance of execution, to the
client.
7.14.3 An LDM, through its ADR, must declare that he it is trading as a principal by the
time the order is placed on the DATES.
7.14.4 Orders executed on behalf of the directors or ADR of the LDM shall be considered
as principal orders.
7.15 DEFINITION OF ORDERS
Allowable orders are the following:
(a) Limit Order:
An order which has a specified price when it is posted for execution.
(b) Market Order:
An order which does not have a specified price when it is posted for execution.
This type of order must be executed promptly at the best price obtainable and will
have priority over limit order at the same price levels and assumes an initial price
limit value normally based on the price most advantageous in the market. A
Market Order trades through a range of prices starting at the best price in the
market.
7.16 VALIDITY OF BIDS AND OFFERS
To be valid, bids and offers must be made:
(a) during the trading session;
(b) to all members generally and without discrimination, and in the manner prescribed by
these Rules.
7.17 TICK SIZES AND TRADE RANGES
7.17.1 Orders must be placed within the defined tick sizes as specified by the Exchange.
All trades shall be executed within the trade ranges as set by the Exchange.
7.17.2 The Exchange shall have the right to adjust tick sizes and trade ranges in the light
of market conditions.
7.17.3 Any trades effected at prices which are outside the stipulated trade range will be
cancelled.
7.18 MINIMUM LOT SIZE
The minimum number of shares or minimum lot size shall be 100 shares.
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7.19SPREADS (TICKS)
Bids and Offers will be advanced in the following minimum spread or tick sizes:
Table 1
Stock Price
(Shs)
Tick Size
(Shs)
Less than 200
200-499
500-999
1000 and over
2.5
5.00
10.00
20.00
7.20 DIVISION OF MARKET
7.20.1 Unless stated otherwise, the market for listed securities is divided into equity and
debt market.
7.20.2 The equity marker is divided into the normal lot, odd lot and block trades.
7.20.3 The block trades are sub-divided into pre-arranged trades and All or None (AON)
trades.
7.21 ODD LOTS
These are lots numbering less than the minimum lot size and shall be traded at a separate
trading section.
7.22 BLOCK TRADES
7.22.1 To facilitate the processing of large blocks of securities without causing a
substantial effect on price, the Exchange provides special procedures for block
transactions.
7.22.2 Block trades are lots of shares with a value exceeding Tshs. 100mln.
7.23 PRE-ARRANGED TRADES
Pre-arranged trades are trades where buyers and sellers have been identified and only
require to be matched.
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7.24 BLOCK TRADES EXCEEDING MARKET CAPACITY
7.24.1 When an LDM receives an order to buy or sell listed securities which in its opinion
is of sufficient size to exceed the capacity of the Market and thereby wishes to
seek a matching order, it must consult with the Exchange before attempting to
create such a matching order.
7.24.2 If the Exchange decides that the proposed bargain is of a size to exceed the
capacity of the Market, the Exchange may give permission to the member to
approach other members to attempt to match the bid/offer in whole or in part,
provided always that the member approaches only other members of the
Exchange and/or its own clients.
7.24.3 The Exchange may, however, taking into consideration the maintenance of an
orderly market and the interest of investors, order that such securities be offered
for sale pursuant to a public offer by way of prospectus or equivalent offering
document.
7.24.4 For the purpose of
Council to require
circumstances, the
rules, shall mutatis
document.
such an offer, and without prejudice to the powers of the
such information as it may consider appropriate in the
provisions relating to Listing Particulars under the Listing
mutandis apply to such prospectus or equivalent offering
7.24.5 Where irrespective of the market value or volume, the securities offered for sale
represent 10% or more of the voting power at a general meeting of the listed
company the securities shall be tendered upon publication of a notice of sale by
the holder stating the following:(a)
A summary of the company’s audited accounts
(b)
Quarterly or semi- annual results where available;
( c)
A summary of the management and key personnel of the company;
(d)
The procedure for application or bids and allotment;
(e)
The costs of the offer for sale;
(f)
The offer price per share;
(g)
The opening and closing dates.
(h)
The details of the resultant proposed block trade must be fair to all clients
involved and be so decided by the Exchange.
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(i)
The Chief Executive must be given sufficient prior notice in order to be able to
advise the members of such a proposed block trade by the close of business
of the day before such block trade is to be effected. The advice of the Chief
Executive shall include the number of shares and/or the nominal amount of the
security and the agreed price.
7.25 PLACING ORDERS
7.25.1 Orders are matched according to fixed rules and execution prices are set.
7.25.2
Price and volume details of all completed transactions are electronically
communicated immediately to all the LDMs involved.
7.26 TRADING PHASES
The trading day at the DSE will be divided into following time periods
(a) Pre-open
-
10.00
(b) Open-Auction
-
10.30
(c) Regular trading
-
10.30 – 12.00 noon
(d) Close
-
12.00 noon
7.27 PRE-OPEN
7.27.1 During the pre-open, orders can be entered or cancelled. However, no trades
take place. Orders during this period are held in the DATS but are not executed
by the execution engine.
7.27.2 The market status will be displayed as ‘PRE-OPEN’.
7.27.3 For traders’ information, the pre-opening order quantity imbalance is continuously
calculated and disseminated. Each new incoming order and each cancellation
results in a recalculation. Price information is not displayed.
7.27.4 No market orders are allowed during pre-open. If submitted they will be rejected.
7.27.5 Orders cannot be placed on the odd lot board during pre-open.
7.27.6 Orders which are entered during pre-open with Fill or Kill (FOK) or Immediate or
Cancel (ICC) qualifiers will not be accepted by the system.
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7.28 OPEN AUCTION
7.28.1 The opening price is the price level at which the greatest number of securities
could be executed.
7.28.2 In case of a tie between many prices the highest price will be taken as the
opening price.
7.28.3 All trades will be executed at the same price – the opening price.
7.28.4
At open-auction the system executes as many trades as possible at the
calculated opening price.
7.28.5 Bids and offers do not have to balance in quantity for a successful open auction to
occur.
7.28.6 Orders at the opening price may remain partially filled or unexecuted due to an
imbalance in the bids and offers.
7.28.7 If the security does not trade during open-auction the price of the first trade after
auction will be its opening price.
7.28.8 Odd lot orders are not considered for execution during open-auction.
7.28.9 During open-auction the market status will be displayed as ‘AUCTION’.
7.28.10
Opening Algorithm:
Step 1: Establish maximum volume price.
Step 2: Match all possible orders using price and time priority at the opening price.
Step 3: Match from the side of the market with the least orders against the side that
fills most of orders above and below the price.
Step 4: Orders at the equilibrium price are satisfied on a pro rata basis as follows:
(a) Pro-rating takes place in blocks of 100 units (Normal lot).
(b) Orders above 100 units prorated in blocks of 100 units.
(c) If demand cannot be met allocation is by time priority.
For debt security pro-rating will take place according to its trading unit which is
dependant on its par value.
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Step 5: All unmatched orders will be stored in the order book when the market opens.
These orders will be stored in price/time priority order with orders of equal
price given time priority.
Open Auction Example:
7.28.11
(a) Order Book
(i)
In the DATS supply and demand is represented in the form of an order
book.
(ii)
This is the compilation of all buy and sells orders on hand for a specific
security at a certain point in time.
(iii)
In the middle of the table all possible price increments are shown in
descending order
Table 2
Buy Orders
Price
(TZS)
Bid
Cumulative
Per
From
price
Highest
Price
200+400 600
600
300
300
900
400
400
1300
500
500
1800
800+1000 900
2700
1000
1000
3700
Offer
Sell Orders
Cumulative
From
Per
Lowest Price
Price
Orders
(A)
101.00
100.50
100.00
99.50
99.00
98.50
98.00
97.50
97.00
3800
3100
2500
1900
1600
1300
700
600
600
300
300
1300
Orders (B)
700
200+300+100
100+200+300
300
100+200
100+500+700
(iv)
The two columns directly beside the price column are decisive.
(v)
Here all the orders from the least favourable prices onwards are
accumulated for both sides.
(vi)
On demand side the orders with the highest purchase limits through to the
lowest are added continuously.
(vii)
On the supply side, the accumulation starts with the lowest sell price to the
highest price.
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(viii)
In columns (A) and (B) orders are displayed in sequence of entry (from left
to right) at each price level.
(b) Open – Auction
A typical execution sequence for opening using the rules described in 5.28 (iv)
Opening algorithm for the example data given in Table 1 above would be as
follows:
(i)
The maximum volume price is 99.00 (2700 shares/debentures) {Step 1}
(ii)
The Buy side has the least orders 2700 versus 3100 on the Sell side.
{Step 3}
(iii)
2500 securities which have a better price on the Sell Side than the
opening price can be executed first leaving 2700-2500-200 securities to be
prorated at the opening price {Step 2}
(iv)
The pro-rating of orders at the opening price will be b100 for s200, and
b100 for s300 {Step 4}
(v)
All unexecuted orders will be stored in the order book when the market
goes into regular trading {Step 5}
7.29 REGULAR TRADING
7.29.1 Method of Transaction
The criteria for execution during regular trading are as follows:
(a) Price Priority
The highest bid and lowest offer have precedence over all others. Orders
are ranked by price sequence in the execution engine.
(b) Time Priority
When bids or offers are at the same price, the earliest one takes priority over
those delivered later. Rules for fixing prices and matching orders during
regular trading are listed below.
Rule 1
If a new order (either a market or a limit order) matches a limit order in the
order book, the price of the limit order initially in the order book limits the
transaction price. The order book thus dictates the price.
Rule 2
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(i) If a new limit order matches a market order in the order book, the price
of the newly entered limit order becomes the execution price.
(ii) If there is a limit order on the opposite side of the order book (in
addition to the market order0 and if this limit is more favourable for
the new incoming limit order, the trade between the new limit order
and the market order takes place at the favourable price (i.e. the
price of the initial limit order).
(iii) An example: A newly arrived purchase order is at 99.50 is matched
to an existing market order. Due to rule 2, the price is 99.50. If a
sell order with a price limit of 99.00 were in the order book (in
addition to the market order), this price would have been better from
the purchaser’s point of view than the price of 99.50 and would
therefore be the transaction price between the newly arrived
purchase order and the existing market order.
Rule 3
(a) If two market orders are matched, the last traded price becomes the
transaction price.
(b) If there is a limit order on the opposite side of the order book (in addition
to the market order0 whose price is more favourable for the newly
arrived market order than the reference price (last traded price) then the
more favourable price is applied for the transaction between the two
market orders.
(c) An example of this: A market sell order arrives. A transaction is done
with an existing market order on the purchase side. According to Rule
3(a), the last traded price becomes the transaction price. Let us
assume this is 98.00. If besides the market order on the purchase side,
a limited order of 98.50 were available, this price would be better than
the reference price (TZS 98) from the seller’s standpoint. The
transaction between the two market orders would therefore be executed
at 98.50.
7.29.2 Unexecuted or partially filled orders are placed in the order book.
7.29.3 During Regular Trading the market status will be displayed as “OPEN”
7.29.4 Regular Trading Example
An example of a multi-stage matching process based on a new incoming order is as
follows:
Table 3
Security ABC
Round lot size 100 securities, price increment TZS 0.25 reference price TZS
99
Purchase
Price
Sale
79
Number per price
500
200
Number per price
88.00
98.50
99.00
99.50
400
200+300
(i) A purchase order for 700 securities at 99.50 arrives. Matching starts with the
order to sell 400 securities at 99.00. The price is determined by the sell limit
order according to the first rule.
(ii) 400 securities at 99.00
(iii) 300 securities remain from the new order. They are matched against the next
order – sell 200 securities at 99.50. Since there are two orders at 99.50, they
are ranked in order of entry. The order of 200 securities is older. Again the
first rule is applicable. Second trade: 200 securities at 99.50.
(iv) The remaining 100 securities are now matched to the sell order of 300
securities at 99.50. Again the first rule applies.
(v) Third trade: 100 securities at 99.50.
7.29.5 The newly arrived purchase order (700 at 99.50) is then executed. The order
book now looks as follows:
Table 4
Purchase
Number per price
500
200
Price
Sale
Number per price
98.00
98.50
99.50
200
Reference price (i.e. last traded price): 99.50
7.30 ENTERING ORDERS
7.30.1 Clients who have accounts with the CDS shall place their orders with the brokers,
either directly or through a custodian bank.
7.30.2 Orders shall be entered by the brokers through the DATS trading terminals, which
are then transmitted on-line to the DATS.
7.30.3 The DATS trading terminals may be located in the member firm’s offices or at the
Trading Floor.
7.30.4
The trading terminal performs three functions, display of market data, display of
trader’s orders and executions, and acceptance of new orders, amendments and
cancellation of orders.
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7.30.5 The DATS acknowledges the receipt of an order, marks it with a time stamp, and
checks it for validity. If it is technically valid, processing continues. If not, it is
returned with the appropriate comment. No checks apart from those explicitly
stated in these rules will be performed on order size or price.
7.30.6 The DATS maintains an order book per board, divided into bids and offers.
7.30.7 The prices are determined and orders executed according to specific rules
detailed in the DATS Rules.
7.31 ORDER LOG BOOK
All buying and selling orders shall be listed in an order log book which at least contains the
following information:
(a) A unique order number;
(b) The date and time of receipt of the order;
(c) The type of order (i.e. bid or offer);
(d) The name or symbol of the listed company;
(e) The number of shares or debentures to be traded;
(f)
The trading price and any conditions;
(g) The expiry condition of the order; if any;
(h) The client ID;
(i)
The financial intermediary code, if applicable.
7.32 TYPES OF ORDERS
There are two types of orders that can be placed in the DATES
(a) Limit orders
(b) Market orders
7.33 LIMIT ORDERS
This is an order in which the maximum buying price or minimum selling price is specified.
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7.34 MARKET ORDERS
7.34.1 A market order is defined as an order to buy or sell a security at the best price or
prices prevailing in the market at that point in time.
7.34.2 To prevent market orders being executed at extreme prices due to the presence
of existing orders it is necessary to protect market orders by having a protection
price.
7.34.3
The “protection price” is calculated by the system every time a market order is
placed.
7.34.4
The protection price is calculated on a fixed percentage of the ‘touchline’ price.
7.34.5 For market buy orders, protection would be applied to the touchline bid price, and
for market sell orders protection would applied to touchline offer price.
7.34.6 After attaching the protection price to the market order, the order will be executed
similar to any other limit order.
7.34.7 Price is given the highest priority in the system. Thus market orders will stand a
better chance of execution than limit orders.
7.34.8 The balance unexecuted quantity of the order, if any, will be stored in the system
for “n” (60) configurable seconds and then cancelled if unexecuted.
7.34.9 Market orders do not appear in the normal order book.
7.35 TOUCHLINE
7.35.1 The touchline bid is the highest bid price and the touchline offer is the lowest offer
price in the market available at that point in time.
7.35.2 If bids or offer are unavailable for the day the touchline is defined as the previous
closing price.
7.35.3 For the first day of trading of an IPO the touchline is defined as the issue price.
Example
Table 4 represents the order book for security ABC
Table 5
Bid
Price
100
97.00
95.00
82
Offer
100
100
300
90.00
88.00
87.50
87.00
400
100+200
300+100
200
7.35.4 As per the above example, the touchline bid price is TZS 88.00 and the touchline
offer price is TZS 90.00
7.36 TICK SIZES AND TOUCHLINES
7.36.1 Orders must be entered within the defined tick sizes as specified by the
Exchange.
7.36.2 All trades shall be executed within the touchlines as set by the Exchange.
7.36.3 The Exchange shall have the right to adjust tick sizes and touchlines in the light of
market conditions.
7.37 DISCLOSED AND UNDISCLOSED VOLUMES
7.37.1 An order may specify the total share volume and may specify a lesser amount
that is disclosed to the market.
7.37.2 A disclosed volume may be entered for an order.
7.37.3 The disclosed volume may not exceed the total volume.
7.37.4 For an order where disclosed volume is not specified, it is implicitly equal to the
total volume.
7.37.5 Undisclosed volume amounts are private; they are only seen by the LDM entering
the order.
7.37.6 If an order can be filled on initial entry, it will be filled to the extent of the volume of
the order.
7.37.7 A partial fill will result in the remaining order volume being posted with the full
original disclosed volume provided sufficient volume remains.
7.37.8 The disclosed quantity acts as the roll-in quantity upon the original order entry.
7.37.9 Roll-in quantity cannot be changed except by changing the disclosed quantity.
7.37.10 A change in the disclosed volume will not change the total or remaining volume.
7.37.11 An increase in disclosed volume will cause a new time stamp and change in
queue priority.
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7.37.12 A decrease in disclosed volume will not cause a new time stamp.
7.37.13 Partial fill diminishes current volume without replenishment from undisclosed
volume.
7.37.14 The total disclosed volume must be traded before a new roll-in quantity is brought
in.
7.37.15 Once the total disclosed volume is traded, another amount equal to the disclosed
volume will be rolled-in with a new effective time stamp.
7.38 PROTECTION PRICE
7.38.1 The protection price is the touchline price plus or minus the allowed percentage
variation.
7.38.2 The percentage variation allowed on the touchline price is a configurable
percentage applicable to all listed securities. It is set at the discretion of the
Exchange and will be made known to LDMs.
7.38.3 The protection price limits the possible price at which market orders can be
executed.
7.38.4 For a sell market order the protection price is calculated in the following manner:
Protection Price = Touchline Offer Price – (Protection % x Touchline Offer
Price)
7.38.5 For a buy market order the protection price is calculated in the following manner:
Protection Price = Touchline Bid Price + (Protection % x Touchline Bid
Price)
7.38.6 Example
(a) Broker X places a market order for buying 1000 securities of security ABC. The
touchline while placing the order is TZS 90 (offer) and TZS 88 (bid) – see table 4.
(b) Assume the protection % is 10%. In this case the protection price would be TZS
96.8 i.e. TZS 88 (being the touchline bid price) + [10% x 88 (touchline bid price].
(c) The order book is:
Table 6
Price Markers
Price
Offers
Orders
100
100
Protection 97 (bid)
84
Broker
Z
Touch line 90 (offer)
Touch line 88 (bid)
Protection 81 (offer)
97
95
90
100
300
200
Y
B
A
(d) Broker X’s market order would thus get executed as following:
(i) 200 @ 90 for A
(ii) 300 @ 95 for B
(iii) 100 @ 95 for Y
(e) Since the order for sale from broker Z has a higher price than the protection price,
it will not be matched. The balance unexecuted order quantity of 400 securities
will remain for 60 seconds with touchline protection. If unexecuted by then it will
be cancelled.
7.39 ORDER ATTRIBUTES
7.39.1
Orders can have the following attributes:
(a) Qualifiers
(b) Time in force
(c) Minimum fill quantity
(d) Disclosed quantity
7.39.2
These attributes can be used by the brokers’ to tune the execution strategy of
an order to a limited degree.
7.40 ORDER QUALIFIERS
7.40.1
Order qualifiers modify the execution conditions of an order based volume,
time and price constraints.
7.40.2
No qualifiers
Orders will be executed at a specified price or better. If a partial execution
occurs the remainder will be added to the order book and will remain in the
order book till executed, cancelled, or expired.
7.40.3
Fill or Kill (FOK)
Requires the immediate purchase or sale of a specified quantity, at a given
price or better. If the whole order cannot be filled immediately, it is killed.
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(These orders do not get entered into the order book). FOK orders cannot be
entered into the odd lot section or captured by the system during pre-open.
7.40.4
Immediate or Cancel (ICC)
Requires immediate purchase or sale of a specified quantity at a specified
price or better for all or part of the order. If no immediate execution occurs the
order is cancelled. If an immediate partial execution occurs the remainder is
immediately cancelled. IOC orders cannot be entered into the odd lot section
or captured by the system during pre-open.
7.40.5
TIME IN FORCE (TIF)
Time in force choices limit the lifetime of an order in the book.
7.40.6
Good till cancelled (GTC)
The order remains valid till cancelled or for 5 market days. Only normal lot
orders may contain the time in force GTC.
7.40.7
Good till day (GTD)
The order is cancelled at the end of the specified trading day if unexecuted
(maximum 5 days). Only normal lot orders may contain the time in force GTD.
7.40.8
Day order (DAY)
The order is cancelled at the end of the trading day.
7.41 MINIMUM FILL QUANTITY
7.41.1 The system does not allow a minimum fill quantity to be entered for normal lot
orders.
7.41.2 However a minimum fill quantity can be specified on odd lot orders. This will
enable lot orders to be executed in blocks of minimum fill.
7.42 DISCLOSED QUANTITY
7.42.1 The order size will be revealed as the disclosed quantity and not as the full order
quantity.
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7.42.2
The disclosed quantity will cause the executions to occur in blocks of disclosed
quantity.
7.42.3 When a block of disclosed quantity is executed the balance order loses its time
priority. Disclosed quantities must be greater than 25% of the order size.
7.42.4 When the total quantity for an incoming order is matched to an existing order in
the order book, the incoming order’s undisclosed quantity is ignored as it will not
be visible to the market at the time of execution.
7.42.5
Orders with a specified disclosed quantity that appear in the order book, and
hence have market visibility, will be executed in blocks of disclosed quantity in the
manner specified above.
7.43 ALTERATION OF ORDERS (Change Former Order – CFO)
An LDM may change the terms of an order already entered in the trading system in the
following manner:
(a) If the security or the order type (buy or sell) needs to be changed, the order must be
cancelled and re-entered.
(b) If any of the following changes are effected, a new effective time stamp will be given to
the order
(i) Change in price
(ii) Increase in disclosed volume
(c) If any of the following changes are effected, the order will keep its original effective
time stamp:
(i) Decrease in disclosed volume;
(ii) Changes in undisclosed volume.
7.44 CANCELLATION OF ORDERS
An order can be cancelled as long as it had not yet been matched. During trading, LDMs
can remove groups of orders or all of their orders from the trading system.
7.45 PRIORITY OF ORDERS FOR EXECUTION – QUEUE PRIORITY
7.45.1
Orders that cannot be immediately executed are queued for future execution in
a specific order based on a queue priority.
7.45.2
The factors used to determine the queue priority in order of consideration are:
87
(a) Price
The price on an order determines its primary priority for execution. An order
can be specified with a limit price or a market price. For both buy and sell, the
higher priority price is defined as the better price, i.e. a buy order at a higher
price will take priority over other buy orders at a lower price and a sell order at
a lower price will take priority over other sell orders at a higher price.
(b) Capacity
The capacity of an order determines its secondary priority for execution. At a
single limit price, orders of clients (agency orders) will have precedence over
those of LDMs and their employees (principal orders).
(c) Time of Entry
The time of entry of an order governs it’s priority on a First In First Out (FIFO)
basis. Orders entered in the DATS are given a time stamp noting their actual
date and time of entry. At a single capacity band (agency or principal) a limit
price, the earliest time of entry take priority in the queue;
7.45.3
An order entered prior to the current trading session is given priority in the
queue over orders entered during the current trading session;
7.45.4
All new orders entered in the current trading session during Pre-Open are
considered equal in time priority for the purpose of At the Open (Opening
Algorithm);
7.45.5
If any portion of an order remains unfilled after the At the Open (Opening
Algorithm) its time priority will be based on the actual time of entry during Preopen.
7.45.6
An order that participates in a fill that does not entirely deplete the current
disclosed volume (i.e. is partially traded) will retain its effective time of entry
and its position in the queue;
7.45.7
When undisclosed quantities are included in an order, a new effective time
stamp will be given when undisclosed volume is rolled-in to the disclosed
volume. Roll-in occurs when disclosed volume is reduced to zero (vide
Disclosed and Undisclosed Volumes section);
7.45.8
Changing the terms of order may result in a new effective time stamp and may
change the relative priority position of the order in the queue. Whether or not
a new time stamp is assigned depends on the nature of the change to the
order (vide the Alteration of Orders – Change Former Order (CFO) section).
7.46 ORDER VALIDATION
88
7.46.1 Input orders are validated for correctness prior to forwarding to the DATS.
7.46.2 The following validation checks will be on run on an order prior to forwarding it
to the DATS:
(a) Valid trading lot size
(b) Valid security code
(c) Trading permitted on security (is it de-listed/suspended etc)
(d) Price difference exceeding n% of the previous closing price will not be
accepted
(e) Price changes for main board and odd lot board are
Table 7
Stock Price
(Shs)
Tick Size
(Shs)
Less than 200
200-499
500-999
1000 and over
2.5
5.00
10.00
20.00
(f) Valid client/LDM ID combination
(g) Volume is within foreign limit rules
(h) Check with CDS that the seller holds the required number of
shares/debentures.
7.46.3 An order that passes the validation checks is accepted by the DATS.
7.46.4
Accepted orders will contain an Exchange allocated order ID, which is used
for all future references to the order.
7.46.5 If the order fails validation then it is rejected. Until an order has been accepted
by the DATS it is not valid.
7.47 VALIDITY OF BIDS AND OFFERS
To be valid, an order must specify:
(a) the name or symbol of the listed security;
(b) whether the order is to buy or sell;
89
(c) the number of shares or stock to be traded;
(d) explicit instructions regarding the trading price;
(e) any conditions which must be met prior to the order becoming effective, if any e.g. limit
order or market order;
(f) the underlying client ID on whose behalf the order is being effected; and
(g) the financial intermediary code, if applicable.
7.48 LOT SIZES
7.48.1 The trading lot size of each listed security is specified by the Exchange.
7.48.2 The following lot sizes are configurable:
(a) Equity
The order size for normal lot orders is 100 shares, or multiples of 100, and is
not dependent on the issue price of the shares. Orders which are for less than
a 100 shares are executed on the odd lot board. An order for a mixed lot (for
e.g. 120 shares) has to be separately entered as normal and odd lot orders.
(b) Debt
The order size for normal lot orders is dependent on the par value of the
debenture.
7.49 ORDER EXECUTION
7.49.1 All trades that occur on the exchange are executed by the DATS.
7.49.2 When an LDM inputs an order through the DATS trading terminal, the order is
forwarded to the DATS.
7.49.3 Within the DATS the state of the order is tracked allowing the current status to be
determined and the transaction history from the initial submission to be viewed.
7.49.4 Orders will be queued in price, capacity and time order and are available for
modification or cancellation prior to execution.
7.49.5 Orders will be matched according to one of two methods; Open Auction or
Regular trading.
7.50 NEW ISSUES PRICE DISCOVERY
90
Due to large price swings for a new issue, and in order to allow for large premium on IPO’s
etc price discovery is completely based upon the market rather than issue price.
7.51 ODD LOT TRANSACTIONS
7.51.1 Odd lots are listed in a separate order book in price and order of entry.
7.51.2 They can only be entered as limit orders.
7.51.3 For execution, odd lots are matched against each other using the same rules as
for normal lots.
7.51.4 Orders that comprise of one or several normal lots and an additional odd lot must
be entered as such by the broker as separate orders.
7.51.5 Minimum fill can be specified on an odd lot order.
7.51.6 Odd lot orders cannot be entered during pre-open.
7.51.7 Odd lot orders are not considered for execution during open-auction.
7.51.8 Visibility
The odd lot book will be visible to the whole market.
7.51.9 Statistics
Odd lot executions will not update the indices or the last traded price.
7.52 BLOCK TRADES
7.52.1 Pre-arranged Trades
(a) Pre-arranged block trades as they are already negotiated trades must be
entered with the contra LDM codes.
(b) Until both sides of the order with corresponding contra LDMs have been
entered the block trade is deemed not to have been activated.
(c) A pre-arranged trade will be entered by both parties specifying the security,
client, contra LDM code and price.
(d) The crossing is deemed to be entered when both parties have completed the
entry.
(e) If the seller does not have an adequate CDS balance the order will be
rejected. The order will also be rejected if there is a mismatch in quantity of
the two entered orders.
91
7.52.2 Price determination mechanism
The pre-arranged trades will execute at the entered price.
7.52.3 Amendments
Crossing orders cannot be amended but can be cancelled by the LDMs.
7.52.4 Order life time
Unmatched pre-arranged trades are expired in “n” (15) configurable minutes.
7.52.5 Price constraints
Prearranged trades shall not take place at a price below 5% of the previous closing
price.
7.52.6 Trading unit
To be crossed the parcel must be:
(i) More than 5% of the issued quantity of securities OR
(ii) Greater than TZS 100,000,000/=.
7.52.7 Visibility
(a) Orders placed on the crossing board will not be visible in the normal market data
displays and hence will not put price pressure on other trading.
(b) The trade will be displayed as an execution.
7.52.8 Statistics
Prearranged trades will not update the indices and closing price.
7.52.9 Clearing the order Book
Prearranged trades are not required to clear the Order book.
7.52.10 All or None Blocks
(a) The first AON block bid/offer sets the block size for the auction and must be
entered with contra LDM code.
92
(b) All subsequent bids and offers will be for this fixed parcel size and do not require
contra LDMs. Only the best bid and offer for the AON block is retained.
(c) No AON blocks of other parcel sizes for the same security will be accepted till the
auction is concluded for that security. This transaction follows an announcement
from the Exchange of the securities being auctioned and operates for a fixed
period of time.
(d) At the end of the time period the best two orders are matched using the procedure
described below.
(e) AON orders cannot be cancelled or changed. If an order that is worse than a
current order is put in then it will be rejected.
(f) The price determination for AON block trades is as follows:
(i) If the buy side is constant and the sell side is bettered then the best sell price
is the trade price.
(ii) If the sell side is constant and the buy side is bettered then the best buy price
is the trade price.
(iii) If both sides are as entered the initial price is the execution price.
(iv) If a bid is reversed the active side’s price is the execution price.
7.52.11 Bidding Constraints
(a) The bidding constraints will limit the way an AON parcel can be bettered. In all the
cases below the parcel size is constant.
(b) For initial entry both Buy and Sell orders must be entered with the same quantity
and prices with appropriate contra LDM code.
(c) The price must be better for subsequent orders and the contra LDM code is not
required.
(d) Once a side has been bettered then only that side can be bettered, unless the
parcel is reversed by the Exchange.
(e) A client cannot better his own bid/offer already on the order book.
7.52.12 Bidding procedure
(a) The bidding process starts after the initial bid and offer have been entered on the
board.
(b) The AON parcel will be concluded at 12.00 noon on the 3rd market day.
93
(c) The three market days will include the day on which the initial bid and offer are
entered on the DATS.
(d) However, if there is widespread interest in the parcel with intense bidding taking
place, the Exchange will, at its discretion allow bidding to continue after 12.00
noon.
(e) In the event, the parcel will be conducted as soon as the bidding stops.
(f) After 12:00 noon bidding must take place within very short intervals (2-3 minutes
from previous bid) and if an interested LDM does not continue with improving their
bid within short time intervals, the Exchange will deem the LDM is no longer
interested in the parcel.
7.52.13 Amendments
AON Parcels cannot be amended or cancelled by the LDMs.
7.52.14 Order life time
All or None parcels are concluded 3 market days after the initial bid and offer
have been entered on the board – at 12.00 noon on the 3rd day.
7.52.15 Price constraints
AON parcels do not have price range constraints and are completely decoupled
from all other books.
7.52.16 Trading Unit
To be an all or none block the share quantity must be greater than 5% of the
issued quantity or greater than TZS 100,000,000/-=.
7.52.17 Visibility
The AON order book which contains only the best bid and offer is visible to all the
brokers. The execution will be reported.
Statistics
7.52.18
AON trades will update only the turnover and the number of securities traded.
7.53 AMENDMENT/CANCELLATION OF ORDERS
7.53.1 Once an order is submitted to the Exchange, it can be required either be cancelled or
amended by the LDM if conditions permit.
7.53.2 Cancellation of Orders
94
(a) Orders can be cancelled by their respective LDMs at any point prior to execution.
(b) If partially executed any Un-executed portion, of an order can be cancelled.
(c) Orders for AON block trades are irrevocable (i.e once an order has been placed it
cannot be cancelled or changed except with special permission from the
Exchange).
(d) Pre-arranged block trades allow cancellations only.
7.53.3 Amend Order
(a) The following fields for an order can be changed prior to execution, or for any
unexecuted portion of an order:
(i) Price
(ii) Volume
(b) An order amendment will cause an order to lose or gain priority.
7.54 TRADE CANCELLATION
Executed trades can be cancelled with the consent of the Exchange and mutual
agreement of both brokers within the settlement period.
7.55 MARKET CLOSE
As the market is in the process of being closed the market status will be displayed as
‘CLOSING’. When the market is closed the market status will be displayed as ‘CLOSE’.
7.56 CLOSING PRICE
7.56.1 Closing price will be defined as the Volume Weighted Average Price (VWAP) of
trades executed during the last one hour of trading of the specified security
(please refer Example 1).
7.56.2 If the security does not trade during the last one hour the closing price will be the
VWAP calculated for the period of time it has traded (please refer Example 2).
7.56.3
After close of trading, no activity can occur until the pre-opening begins on the
next business day.
7.56.4 VWAP = in total value traded period
total volume traded in period
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7.57 DISSEMINATION OF MARKET INFORMATION
The Exchange system provides the means for market participants and investors to gain
access to market information on a real time basis.
7.58 TRADING HALTS
7.58.1
Market Halt
(a) The market can be halted at the discretion of the Exchange during pre-open
and regular trading hours.
(b) During a market halt the market status will be displayed as “HALT”.
(c) The Exchange can subsequently lift the halt on the market and the market will
return to the status prior to imposing the halt.
7.58.2
Security Halt
The Exchange may impose a trading halt on a security in the following
instances:
(a) prior to the announcement of any price sensitive information;
(b) to obtain a clarification from the company on a rumor/report regarding the
company which has been brought to the attention of the Exchange;
(c) when there is unusual movement in price/volume of a security.
7.58.3
Trading in the security will resume as soon as the announcement/clarification
from the company is disseminated to the market.
7.58.4
A trading halt may be imposed for a time period during a market day or the halt
may extend beyond one day until the company issues a statement to the
Exchange for dissemination.
7.58.5
The DSE has set a circuit breaker for individual securities (known as trip
percentages). When the price of a security exceeds the trip percentage,
trading in the security is automatically halted.
7.59 CONTRACT NOTES
7.59.1 An LDM who transacts sales or purchases of securities on behalf of a client must
issue a Contract Note to the client within one business day after the trade.
96
7.59.2 Such a Contract Note must bear the words “Licensed Dealing member of the Dar
es Salaam Stock Exchange” and “This contract is issued in accordance with the
Rules of the Dar es Salaam Stock Exchange”.
7.59.3 The Contract Note will state clearly the name of the security, the price at which
the trade was executed, the quantity of the security, the commission charged by
the LDM, any other charges and the net amount to pay or receive.
7.59.4 It will also state whether the LDM was acting as agent or principal in transacting
the business.
7.60 DEPOSITORY UPDATES
7.60.1 The CDS will be updated on line, as executions occur.
7.60.2 The CDS will be queried for client position when a sell order is submitted.
7.60.3 If the client has sufficient shares/debentures, the client’s shadow balance will be
deducted with the corresponding amount of securities preventing the client from
placing more securities than the client owns on the market.
7.60.4 Thus, a client’s shadow balance displays the number of securities of a specified
security for which the client has pending sell orders.
7.60.5 On execution the balance and shadow balance will be updated to reflect the
results of the execution.
7.61 HOLDING QUERY
Member firms have the facility of querying their client’s holding for a specified security from
their trading terminals. However, custodian account positions are not visible to brokers.
7.62 BONDS TRADING RULES
The following Rules in addition to the established practices of trading securities at the
DSE shall be applicable to trading of LISTED BONDS on the DATS.
7.62.1 LISTED BONDS
(a) Only listed bonds will be traded on the DATS.
(b) All transactions of listed bonds must be effected through the DSE (This will
be for control purposes and to ascertain that there is only one central price
discovering process to avoid any market distortions prevalent in parallel
markets).
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(c)
(d) All transfers of listed bonds must be effected through the DSE CDS.
7.62.2 BONDS TRADING SECTION
All bonds shall be traded on a separate section and may not be mixed with
otherclasses of securities.
7.62.3 TRADING HOURS
Trading sessions for Bonds shall be conducted at the same time as that for
equities. No transactions shall be effected before the opening and or after the
closing of the market.
7.62.4 AUTHORIZED BOND DEALERS
Only ADRs shall be allowed access the DATS to deal in bonds.
7.62.5 QUOTATIONS BASED ON FLAT OR CLEAN PRICE
(a) Prices quoted on the boards shall be on the basis of flat or clean price
where the quotations shall exclude the accrued interest.
(b) The buyer shall pay the seller the dirty price.
(c) The licensed bond dealer must however indicate the accrued interest
separately in the client contract note.
7.62.6 VALUE DATE
The value date for bonds transactions will be T+3 and the settlement date will
be T+3 by 11.00 a.m.
7.62.7 TRADING EX-COUPON (XC)
(a) For the purpose of trading bonds, books closure for interest payments will
be the seventh calendar day (seventh day inclusive) before the actual
bondholders register closure-date by the Bond Registrar.
(b) Bonds shall be traded ex coupon on the seventh day before the actual
bondholders register closure-date.
7.62.8 TRADING EX PRINCIPAL
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Redeemable bonds (amortizable bonds) shall be traded ex principal on the
seventh day before the principal repayment date as applied under the ex
coupon rule.
7.62.9 DELIVERY AND TRANSFER
(a) Deliveries and transfers for listed bonds shall be effected through the CDS
within three days following transactions via a DVP (Delivery Versus
Payment) system at the DSE.
(b) All bonds traded at the DSE shall be deposited into the CDS before the
transactions are posted on the DATS. This shall be considered to be a
delivery of the securities into the CDS.
(c) Bond Dealers shall be required to verify ownership with the Bond Registrar
as required by the Rules before depositing the securities into the CDS.
(d) On day T (transaction date) by 3 p.m(i)
The DSE shall send a Trade Confirmation Report to the concerned
LDMs for confirmation of traded transactions.
(ii)
The DSE shall send a copy of the executed Trade Confirmation
Report to the Bond Registrar.
(e) The book entry for effecting the transfer of securities shall be effected
within the CDS on T+3 at 11:00 a.m. according to the DSE Rules.
(f) Immediately after transfers by book entries are effected at the DSE-CDS
on T+3 by 11:a.m, a report shall be sent to the Bond Registrar of the bond
together with complete sets of transfer forms.
(g) For Government bonds, the BOT-CDS shall effect a book entry at exactly
11:00 a.m. by debiting the bonds account and crediting the buyers account
with the exact volume of securities traded on the basis of instructions from
the CDS at the DSE-CDS.
7.62.10 SETTLEMENT: DVP T+3
(a) (T in “T+3” stands for the transaction date)
(b) Bonds transactions executed at the DSE shall be settled in a T+3
settlement cycle within the settlement arrangement in place under the
existing Rules of the DSE.
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7.62.11 OWNERSHIP OF BONDS
(a) The ownership of a bond together with all its rights in respect of which the
transactions was effected passes from the seller(s) to the buyer(s)
immediately a transaction is executed on the DATS.
(b) On the value date the DSE shall effect the necessary entries in the CDS
accounts of the clients to reflect the transactions effected during relevant
trading session.
ACCRUED INTEREST
7.62.12
(a) Client contract notes for bonds transactions shall show the amount of
accrued interest separately.
(b) The amount shall be calculated by reference to the rate specified in the
security and the number of days which have elapsed from the last
payment date up to the settlement day.
7.62.13 MARKET REPORTS PUBLICATION
(a) The DSE shall prepare and release an official market report for circulation
and publication in the press after every trading session.
(b) The report shall contain the latest prices dealt in each bond and any other
information as the DSE may from time to time specify.
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CHAPTER EIGHT
8.0 CUSTODY OF SECURITIES AT THE DAR ES
SALAAM STOCK EXCHANGE
8.1
GENERAL
8.1.1
The CDS of the DSE acts like a bank for securities where various
securities are deposited in safe custody to facilitate deliveries for DSE
trades.
8.1.2
Depository of securities into the CDS is voluntary, save, in cases of
Initial Public Offers (IPOs) where Issuing Companies are obliged to
deposit and where trading is to take place.
8.1.3
By depositing securities into the CDS, the delivery of the securities in
settlement of DSE trades can be achieved with entries into the CDS
instead of physically exchanging certificates (scrip).
8.1.4
The securities deposited into the CDS may be withdrawn or pledged.
8.1.5
The Companies Act (Cap.212) requires that the DSE should have Rules
for appropriate custody of securities deposited into the CDS and further,
such Rules are to be approved by the Authority.
8.2 NATURE OF INTEREST IN CDS ACCOUNTS
8.2.1
Securities deposited into the CDS shall be held in custody by the DSE in
trust for the beneficial holders.
8.2.2
A transfer of securities into the DSE, CDS by a holder shall not convey
any transferor's beneficiary interests over the securities deposited.
8.2.3
The beneficial owner shall be entitled to all the rights and benefits and
be subjected to all the liabilities in respect of his securities held by a
depository.
8.3 STRUCTURE OF THE CDS ACCOUNTS
The CDS accounts shall consist of(a) Listed securities which can only be held through Licensed Dealing member;
(b) Non-listed securities which can be held through both Licensed Dealing
Members and non-Licensed Dealing Members CDS Operators.
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(c) Clients of both the Licensed Dealing Members and non-Licensed Dealing
Members CDS Operators.
8.4 CRITERIA FOR ADMISSION OF CDS OPERATORS
8.4.1
Authorised CDS Operators who are Licensed Dealing Members
No person shall be qualified for admission to Licensed Dealing Membership of
the Exchange unless(a) in possession of a currently valid dealer's or broker’s license issued under
Part IV of the Capital Markets and Securities Act, 1994;
(b) has been admitted as an associate member of the Exchange in
accordance with the Articles; and
(c) meets the other qualifications as may be set out by the Council.
8.4.2
Application procedure for LDMS
(a) An applicant for admission as a LDM shall deliver to the Chief Executive
a duly completed application form as shall be prescribed by the Council.
(b) Upon the decision of the Council that the applicant is qualified and fit and
proper for LDM, the applicant shall pay the entrance fee and admission
fee for the time being payable within the period stipulated by the Council,
and the Council shall admit the license holder to Licensed Dealing
Membership.
(c) As from the date of such payment, the license holder shall be registered
as a LDM and be entitled to all the benefits accorded to such members
subject to these Rules.
(d) Should the payment not be made within the prescribed period, the
application shall automatically lapse, unless, consequent upon an appeal
by the applicant to the Council, the Council directs otherwise.
(e) Licensed Dealing Membership and Applicants thereto, shall pay the fees
and subscriptions as shall be prescribed by the Council.
(f)
8.4.3
No LDM shall (unless this is specially decided by the Council) be entitled
to remission of fees and subscriptions on account of absence from
Tanzania.
Bank Guarantee
(a) Every LDM shall furnish the Exchange with a bank guarantee that shall
not be less than the amount prescribed by the Council.
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(b) Such bank guarantee shall be free of any charges of encumbrances and
shall not count for purposes of a
LDM's share capital prescribed by
these Rules.
(c) The Bank Guarantee shall be TZS. 20 million and TZS 10 million for
Dealers and brokers respectively.
(d) An LDM who fails to restore its bank guarantee in accordance with the
DSE unless shall not be entitled to trade until the guarantee shall have
been restored.
8.4.4
Authorised CDS Operators who are not Licensed Dealing Members
Any application to be Non-LDM CDS Operator shall meet the following criteria:
(a) No Non-LDM shall be admitted as a CDS Operator without obtaining a
written approval of the Council.
(b) Application Procedures
(i)
An application to be Non-LDM CDS Operator shall be made to the
Chief Executive (Appendix 12);
(i)
The Chief Executive shall place before the Council an application
from the applicant as well as recommendations thereof for the
decision of the Council which should be final.
(c) Documents to be Submitted With an Application to be Non-LDM CDS
Operator
The following documents shall be submitted to the Chief Executive by the
applicant to be Non-LDM CDS Operator;
(i)
Letter to the Chief Executive from the applicant's Legal Counsel
confirming that the applicant is duly incorporated as a company
under the laws;
(ii)
An undertaking that the applicant shall comply with the CDS Rules
and conditions that the Council shall deem appropriate (Appendix
12);
(iii)
A certificate of incorporation together with three copies of the
applicant's Memorandum and Articles of association;
(iv)
Current business license issued by relevant authorities;
(v)
A confirmation that the applicant has the requisite technical
expertise to deal with securities custody (company registrar);
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(vi)
A copy of contract relating to custody services/company registrar
services between the applicant and its clients;
(vii)
Business history of the applicant for last three years;
(viii)
Copies of the annual report for the last 2 years;
(ix)
A confirmation that the applicant has appropriate safekeeping
measures (such as vaults and other security measures) to store
securities ad other physical records at its end.
(d) Basic Conditions to be Fulfilled by an Applicant
An applicant to be Non-LDM CDS Operator must comply with the following
requirements:
(i)
An applicant must be duly incorporated as a company under the
laws of Tanzania;
(ii)
Has been admitted as an associate member of the CDS or the
Exchange in accordance with the Articles;
(iii)
Posses a valid business license.
(e) Bank Guarantee
(i)
Every Non-LDM CDS Operator shall furnish the Exchange with a
bank guarantee that shall not be less than the amount prescribed
by the Council. Such bank guarantee shall be free of any charges
of encumbrances;
(ii)
A Non-LDM CDS Operator who fails to restore its bank guarantee
in accordance with the DSE Rules shall not be entitled to access
CDS facilities of the Exchange until the guarantee shall have been
restored.
(f) Company Name and Address
(i)
Every Non-LDM CDS Operator shall register with the Exchange
the company name under which it carries its business as a CDS
Operator and shall give advance notice to the Council of changing
the company name so registered.
(ii)
The company name of a Non-LDM CDS Operator registered with
the Exchange shall be the same as that registered by such
member under the Companies Act.
(iii)
A Non-LDM CDS Operator may register with the Exchange more
than one business address held for the purpose of CDS
operations.
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(iv)
If a Non-LDM CDS Operator registers more than one business
address, the CDS Operator shall specify one as its principal
business address.
(g) Other Requirements
(i)
Requirements of the Council
Prior to an approval to be Non-LDM CDS Operator the Chief
Executive must have confirmed to the Council that all
requirements of the Council relating to an application to be NonLDM CDS Operator have been fulfilled by an applicant.
(ii)
CDS Fees
An applicant to be Non-LDM CDS Operator shall pay such entry
and annual fees as may be laid down by the Council from time to
time (Appendix 13).
(iii)
Timing of Council Approval
Approval of any Non-LDM CDS Operator shall become effective
after all procedures and substantive requirements have been
complied with and an official notice to that effect has been issued
by the Council.
(iv)
(v)
Suspension
(i)
The Council may at any time and in such circumstances
as it deems fit suspend or expel Non-LDM CDS Operator
in order to maintain the integrity of the market and/or
where there is a serious violation of the Rules.
(ii)
Where Non-LDM CDS Operator has been suspended, the
procedures for lifting the suspension will depend on the
circumstances and the Council reserves the right to
impose such conditions as they consider appropriate.
Expulsion
(i)
The continuation of a suspension for a prolonged period
without the Non-LDM CDS Operator taking adequate
action to obtain its restoration is likely to lead to the
Council expelling the Non-LDM CDS Operator.
(ii)
There may also be cases where the expulsion without
suspension intervening, particularly when there is gross
violation of the Rules.
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(vi)
Resolution of Issues
(i)
All matters concerning CDS shall be addressed by a NonLDM CDS Operator to the Chief Executive provided that when
a matter has to be determined by the Council, the CDS
Operator may be accompanied by the its representatives and
other advisers any of whom may address the Council.
(ii)
The Council reserves the right to limit the number of persons
involved in such hearings.
8.5 BASIC INFORMATION IN THE ACCOUNTS
8.5.1
Accounts of both Authorised CDS Operators shall contain the following
basic information:
(a) Name of CDS Operator;
(b) Address of CDS Operator;
(c) Nationality;
(d) Authorised CDS Operator's Code;
(e) CDS Account Number;
(f)
Banker's Address and Account Number;
(g) Name(s) of Securities Deposited;
(h) Securities Code(s);
(i)
Quantities and Description of Securities Held; and
(j) Amount of Securities Frozen for any reason.
8.5.2
Accounts of clients of Authorised CDS Operators shall contain the
following;
(a) Name of Client;
(b) Name and Address of CDS Operator;
(c) Nationality;
(d) Authorised CDS Operator's Code;
(e) CDS Account Number;
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(f)
Name(s) of Securities Deposited;
(g) Securities Codes;
(h) Quantities and Description of Securities Held;
(i)
Amount of Securities Frozen if any; and
(j) Client's Reference Number which shall be issued by the Authorised
CDS Operator.
8.5.3
Accounts held by non-LDMs Authorised CDS Operators shall be applied
exclusively for non-trading activities including custody, mortgaging etc.
Trading in those securities shall take place only after the securities have
been transferred to a Client's Account established through an LDM.
8.5.4
A client who holds a CDS account opened through an Authorised CDS
Operator may transfer to another Authorised CDS Operator. In this
case, the former account must be closed and a new one opened
through a succeeding Authorised CDS Operator.
8.5.5
The transfer procedure shall be as follows;(a)
A client shall, in writing inform the current Authorised CDs
Operator of his intention to move to another Authorised CDS
operator;
(b)
A client shall, in the information letter, instruct that Authorised
CDS Operator to transfer a given number of securities from the
account operated that Authorised CDS Operator, to the account
opened by the succeeding CDS Operator;
(c)
A client shall, while instructing the Authorised CDS Operator,
surrender his Depository Receipt issued to him in respect of the
securities in question to the CDS Operator for onward
transmission to the CDS for cancellation and issuance of new
Depository Receipt,
(d)
The Authorised CDS Operator shall, upon receipt of the client’s
information and instructions write a letter to the CDS directing
the CDS to transfer the specified securities to the account
opened for that purpose by another Authorised CDS Operator,
PROVIDED that the client’s instructions are not in defiance of
any provisions of the Agreement between the Authorised CDS
operator and client.
(e)
Where the Authorised CDS Operator refuses or neglects to
authorize the transfer of securities as instructed by the client,
the client shall report the matter to the Exchange and the
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Exchange shall issue directions on what to be done which shall
be final, upon hearing both parties.
(f)
The DSE shall maintain Specimen Signatures of all CDS
Account Holders which shall be referred to for verification
whenever instructions are made to deal with depository
accounts.
8.6 NON LISTED SECURITIES CDS OPERATORS
8.6.1
Council Approval
No non-listed securities shall be deposited in the CDS without a written
approval of the Council.
8.6.2
Sponsorship of Application to Deposit Non-Listed Securities
(a) The Issuer applying to deposit non-listed securities shall appoint an
Authorized CDS Operator to sponsor its application.
(b) The Authorized CDS Operator must ensure that the Council is made
aware of all information which should be brought to its attention.
(c) The Authorized CDS Operator should be responsible for the lodging of any
documents that are required to be submitted with the application for
depositing non-listed securities.
8.6.3
Application to Deposit Non-Listed Securities
(a) An application to deposit non-listed securities in the CDS shall be made
to the Chief Executive in the form of Appendix 11.
(b) The application shall be accompanied by a letter from the Authorized
CDS Operator sponsoring the application;
(c) The Chief Executive shall place before the Council an application to
deposit non-listed securities in the CDS as well as recommendations
thereof for the decision of the Council.
8.6.4
Documents to be Submitted With an Application to Deposit NonListed Securities
The following documents should be submitted to the Chief Executive by the
Sponsoring CDS Operator together with an application to deposit non-listed
securities:(a) Letter to the Chief Executive from the company's Counsel confirming that
the applicant is duly constituted as required by Rule 4.6(a) of the DSE
Rules;
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(b) Letter to the Chief Executive Officer from the Sponsoring CDS Operator
confirming that the applicant shall comply with the CDS Rules and
conditions that the Council shall deem appropriate;
(c) Ten copies of the applicant's memorandum and articles of association (and
of any alterations which are proposed to be made to them prior to public
issue);
(d) A copy of an approval from the CMSA allowing the Issuer to issue shares to
the public.
8.6.5
Basic Condition to be fulfilled by an Applicant
An applicant for depositing non-listed securities in the CDS must
comply with the following requirements:
(a) Issuer to be duly constituted
The Issuer must be duly incorporated as a public company under the laws
of Tanzania;
(b) Status of the Non-Listed Securities
The securities for which an application to deposit in the CDS is sought
must be issued in conformity with the laws of Tanzania;
(c) Distribution of Shares
At least 10% being not less than 500,000 shares of any class of securities
must, not later than the time of being approved to be deposited in the
CDS, be in the hands of the public (i.e. persons who are not associated
with the directors or major shareholders) and the company must have at
least 300 shareholders. Provided that exceptionally, a lower percentage
and /or a fewer number of shares may be accepted by the Council;
(d) Fully Paid Up Shares
Shares must be fully paid up prior to their approval to be deposited in the
CDS, with the exceptions of right issues which shall be fully paid within 3
months of being approved to be deposited;
8.6.6
Other Requirements
(a) Requirements of the Council
Prior to an approval to deposit non-listed securities in the CDS listing
becoming effective, the Chief Executive must also have confirmed to the
Council that the Registrar of the applicant has been appointed and is
situated within Tanzania; \
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(b) CDS Fees
An applicant to deposit non-listed securities at the CDS shall pay
application and annual CDS fees as may be prescribed by the Council
from time to time (See Appendix 13).
(c) Continuing Obligations to be Observed
An Issuer approved to deposit non-listed securities in the CDS should
undertake to comply with all continuing obligations as well as such
requirements as may be determined by the Council from time to time by
completing and submitting a Letter of Undertaking annexed as Appendix
12 .
(d) Suspension
(i) The Council may at any time and in such circumstances as it
deems fit suspend or cancel the CDS custody of non-listed
securities in order to maintain the integrity of the market and/or
where there is a serious violation of the Rules.
(ii) Where CDS custody has been suspended, the procedures for
lifting the suspension will depend on the circumstances and the
Council reserves the right to impose such conditions as they
consider appropriate.
(e) Cancellation
(i) The continuation of a suspension for a prolonged period without the
Issuer taking adequate action to obtain restoration of the CDS custody
of non-listed securities is likely to lead to the Council canceling the
CDS custody for the securities.
(ii) There may also be cases where the cancellation without suspension
intervening, particularly when there is gross violation of the Rules.
(f)
Resolution of Issues
(i) All matters concerning CDS custody of non-listed securities shall
be addressed by a Sponsoring CDS Operator to the Chief
Executive provided that when a matter has to be determined by
the Council, the CDS Operator may be accompanied by the
representatives of the Issuer and other advisers any of whom may
address the Council. T
(ii) The Council reserves the right to limit the number of persons
involved in such hearings.
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8.7 CONFIDENTIALITY
8.7.1
The holding of securities in the CDS account is subject to the
Confidentiality Rules of the DSE.
8.7.2
Authorised CDS Operators through which clients accounts are opened
are also under an obligation not to disclose any information on their
clients' accounts to third parties without written consent of the clients.
8.8 LEDGER BALANCE REPORT
8.8.1
The DSE shall produce and maintain a Ledger Balance Report on all
depository client accounts.
8.8.2
The Report shall be in the form of a Depository Statement which shall
contain the following information;
(a) The name of the client;
(b) The name and quantity of the securities held;
(c) The portion of the client's holdings that may have been mortgaged;
and
(d) The balance of securities available for transfer or settlement.
8.8.3
The Ledger Balance Report will be available to all account holders
through the Authorised CDS Operators on request.
8.9 REGISTER OF SECURITIES HOLDERS
8.9.1
The DSE shall maintain and continuously update a register of existing
securities holders and net balance of their holdings in the CDS.
8.9.2
The DSE shall send updated registers of securities holders to the Issuers
(listed companies) on a regular basis or whenever requested.
8.9.3
The holders of securities of listed companies who wish to inspect their
companies' Registers of Members shall do so by contacting the registered
offices of the companies.
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8.10
SAFE KEEPING OF SECURITIES/DOCUMENTS AT THE DSE
8.10.1 The DSE shall procure and maintain strong fireproof safe cabinets for
the safe keeping of clients' securities which are deposited into its
custody.
8.10.2 The DSE shall establish and maintain a tracking mechanism capable of
instantly establishing the location of any security deposited at the DSE
or in transit between the DSE and the Issuer or DSE and Authorised
CDS Operator.
8.10.3 The DSE shall take necessary steps to protect the transmission and
storage of data under the CDS. The data shall be protected from
unauthorised access, manipulation and destruction.
8.10.4 There shall be available a backup of data stored under the CDS at the
DSE at an off-site location and the Authorised CDS Operators shall also
be required to maintain an off-site backup for all their client's
transactions.
8.11
SCHEDULE OF DSE CDS EVENTS
8.11.1 Members must ensure that they follow the Schedule of Activities outlined
below or as may be changed by the DSE from time to time.
8.11.2 Members must comply with the schedule as provided below:
TIME
REGULAR EVENT
08.00 Hours
•
DSE Offices opens
09.00 Hours
•
Securities are deposited and accounts opened by
Authorised CDS Operators. Securities to be
available for trading on the next business day.
•
Confirm action of previous day's trades with
LDMs.
10.00 Hours
•
Trading Session
11.00 Hours
•
DSE transfers ownership in CDS accounts (5
days previous)
12.00 Hours
•
Trading Session closes
12.40 Hours
•
Market Report Release
12.50 Hours
•
DSE sends confirmed Trade Confirmation Reports
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to the LDMs and their Clearing Banks (two days
previous)
8.12
14.00 Hours
•
Depository Receipts available from the DSE
15.00 Hours
•
DSE Transmits Trade Confirmation Report to
LDMs
•
Clearing Banks informs DSE of money
movements that have taken place as per DSE
instructions
15.30 Hours
•
DSE receives Withdrawal, Mortgage and Release
Request Forms
16.00 Hours
•
Deadline for receiving Withdrawal, Mortgage or
Release Request Forms
AUTHORISED DIGNATORIES
8.12.1 DSE shall maintain a register of the signatures of its personnel who are
authorised to execute CDS documents.
8.12.2 Authorised CDS Operators shall maintain Registers of signatures of their
personnel who are authorised to execute CDS documents and furnish the
same to the DSE.
8.13
OPENING CENTRAL DEPOSITORY ACCOUNTS AT THE DSE
8.13.1 General
(a) All CDS accounts will be opened through Authorised CDS Operators.
(b) All Authorised CDS Operators shall enter into Agreement(s) with the DSE
in respect of their own as well as their clients' securities deposited in the
CDS.
(c) The selling LDMs cannot proceed to the Trading Floor to sell any
securities before they have established that their clients have opened CDS
accounts into which securities, the subject of a sale order(s), have already
been deposited and a CDS Depository Receipt issued.
(d) The buying LDMs cannot proceed to the Trading Floor to buy any
securities before they have established that their clients have opened CDS
accounts and cheques deposited by their buying clients have been cleared
for payment or cash received.
(e) The responsibility for the identity of clients and the bona fide ownership of
their securities lies solely on the LDMs as provided under the Capital
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8.14
Markets and Securities (Conduct of Business) Regulations and the Rules
of the DSE.
ACCOUNT OPENING PROCEDURES
8.14.1 Every client wishing to open a CDS account may approach an Authorised CDS
Operator.
8.14.2 The Authorised CDS Operator shall provide the client with the CDS
Depository Account Application Form .
8.14.3 The client will provide personal details to the Authorised CDS Operator by
completing and signing the CDS Depository Account Application Form [CDS
1(a) for individuals and CDS 1(b) for Body Corporates] and the Transfer Form
TD 1(a) together with the standard Agreement between an Authorised CDS
Operator and a client relating to CDS operations.
8.14.4 The client shall deliver the respective securities to the Authorised CDS
Operator.
8.14.5 The Authorised CDS Operator shall open a reference account for the client
and provide the client with a receipt acknowledging that securities have been
received for custody by the operator.
8.14.6 A Client shall enter into an Agreement with the Authorised CDS Operator in
respect of securities to be deposited in the CDS.
8.14.7 The Authorised CDS Operator shall collect the securities, the signed Transfer
Form [TD 1(a)] and present them to the Registrar of the Issuer for verification.
8.14.8
The Authorised CDS Operator shall complete a Custody Delivery
Confirmation Slip [DSE 2(b)] in duplicate detailing all the documents delivered
and present them to the DSE.
8.14.9 The documents to be presented to the DSE with the Custody Delivery
Confirmation Slip shall include;
(a) Depository Account Application Form;
(b) Certificates for securities;
(c) CDS Deposit Request Form [CDS 2(a)] (where certificates are being
deposited); and
(d) Transfer Form(s) [TD 1(a)] duly signed and verified.
8.14.10 Upon the receipt of the Custody Delivery Confirmation Slip and the required
documents, the DSE shall endorse a RECEIPT stamp on the Custody Delivery
Confirmation Slip and the Deposit Request Form where applicable.
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8.14.11 After the RECEIPT stamp has been endorsed by the DSE, the Authorised
CDS Operator shall retain a copy of the Custody Delivery Confirmation Slip
and CDS Deposit Request Form.
8.14.12 The DSE shall open a CDS Client Account designated by a CDS account
number.
8.14.13 The CDS shall issue a Depository Receipt [CDS 2(c)] in the name of the client
whose certificates have been deposited and deliver the receipt to the client
through the Authorised CDS Operator.
8.14.14 After opening the CDS Client's Account, the DSE shall deliver the respective
certificates together with the relevant documents to the company Registrar of
the Issuer who shall issue a Block Certificate in the name of the DSE.
8.15
DEPOSIT OF SECURITIES INTO THE CDS DURING IPOs
8.15.1 General
(a)
The CDS performs custodial functions providing for the deposit and
transfer of securities deposited therein.
(b)
Securities may be deposited by holders through Authorised CDS
Operators as well as by Issuers during Primary Issues (IPOs).
(c)
Listed companies have undertaken that all transfers of securities listed
at the DSE will be processed through the Exchange.
(d)
Investors who subscribe for securities of companies during IPOs need
to acknowledge and accept that securities allotted to them will be
deposited by Issuers directly into the CDS.
(e)
It is recognised that the processing of applications for subscriptions or
purchase of shares shall be carried out by Issuers.
(f)
The Issuers will issue application forms and appoint agents for receipt
of the forms and accompanying payments.
(g)
The Issuer will allot securities applied for during Primary Issues and
make arrangements for their deposit into the CDS of the DSE.
(h)
CDS account holders who have securities deposited by Issuers at the
DSE, may, if they wish withdraw those securities for custody of their
own choice.
8.15.2 Application Procedure
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(a) Every Issuer which intends to be listed or is listed at the DSE shall in its
prospectus, adopt an Application Form which contains a provision to the
effect that;
"the (share) certificate shall be transferred into the custody of the
DSE Central Depository subject to the several conditions on which
the securities shall be issued by the Issuer. This transfer shall not
convey any transferor's beneficiary interests over the securities to
be deposited at Central Depository of the transferee".
(b) Every Issuer whose securities have been listed and accepted to be held in
the DSE depository shall enter into an agreement with the DSE in respect
of the securities to be deposited.
(c) Every Issuer which intends to be listed or is listed at the DSE shall appoint
Authorised CDS Operators who have been approved by the DSE as
receiving agents.
(d) Authorised CDS Operators shall endorse clients' reference numbers to
every application form submitted to the Issuers through them for the
purpose of facilitating the CDS accounts opening.
(e) Authorised CDS Operators shall provide applicants with Allotment DSE
CDS Specimen Signature forms which shall be duly completed by the
applicants and submitted to Issuers together with application forms.
(f) Allotment of securities pursuant to a Primary Issue is the responsibility of
the Issuer.
(g) After allotment, the Issuer shall transmit to the DSE an Allotment Report in
such format as will be prescribed by the DSE.
8.15.3 Opening of CDS Accounts
(a) Upon receipt of an Allotment Report from the Issuer, the DSE shall open
an account for every allottee and deposit therein securities allotted to the
allottees.
(b) After opening accounts for allottees, the DSE shall issue CDS Depository
Receipts [Form CDS 2(c)] in the names of the allottees and transmit the
receipts to the allottees through designated Authorised CDS Operators.
8.16
STEPS INVOLVED IN PROCESSING A SELL AND A BUY ORDER
8.16.1 Initiation of a Sell Order
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(a)
A selling client (securities holder) will approach an LDM who shall
provide the client with a Sell Order Form [SO].
(b)
The client shall complete and sign the Sell Order Form [SO]
instructing an LDM to sell the securities as directed and
simultaneously deliver to the LDM the respective CDS Depository
Receipt.
(c)
The client shall complete and sign a CDS Sell Transfer Form [TD 1(d)]
instructing the DSE to transfer the securities from the CDS account of
the selling to the CDS account of the buying client.
(d)
The Licensed Dealing Member shall verify the securities held in the
CDS account of the selling client.
8.16.2 Note:
The selling LDMs cannot proceed to the DSE Trading Floor to sell before they
have verified the selling clients' holdings at the CDS.
8.17
EXECUTION OF A SELL ORDER
8.17.1 After verification of the selling clients' holdings with the CDS, the selling LDM
will proceed and post the order at the Trading Floor.
8.17.2 The Sell Order shall be executed in accordance with the Trading Rules and
Procedures of the DSE.
8.17.3 The selling LDM shall, after a trade is executed, complete and sign a Trading
Confirmation Slip [Form DSE 1] in triplicate capturing all the details of the
specific transaction.
8.17.4 The buying LDM will commit to the transaction by countersigning the same
Trading Confirmation Slip.
8.17.5 A Trading Confirmation Slip shall bear a number which shall be used by the
DSE in the process of effecting transfer of ownership of securities through the
CDS.
8.18
INITIAL OF A PURCHASE ORDER
8.18.1 A buying client will approach an LDM who shall provide the client with a
Purchase Order Form [PO].
8.18.2 The client shall complete and sign a Purchase Order Form [PO] instructing the
LDM to purchase the securities as directed.
8.18.3 The client shall issue a cheque or present cash to the LDM.
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8.18.4 The client shall sign a Purchase Transfer Form [Form TD 1(b)].
8.18.5 The LDM shall issue a receipt evidencing payment and deposit the cheque or
cash in a Trust Account.
8.19
EXECUTION OF A PURCHASE ORDER
8.19.1 After deposited cash or cheques have been cleared into the Trust Account, the
buying LDM shall proceed to the Trading Floor of the DSE and post the order.
8.19.2 The buying order will be executed in accordance with the Trading Rules and
Procedures of the DSE.
8.19.3 The buying LDM shall, after a trade is executed, countersign the Trading
Confirmation Slip prepared by the selling LDM.
8.19.4 A Trading Confirmation Slip shall bear a number which shall be used by the
DSE in the process of crediting the buying clients' account and debiting the
selling client's account at the CDS.
8.20
EFFECTING TRANSFER OF OWNERSHIP OF SECURITIES THROUGH THE
CDS
8.20.1 On T+5 the CDS shall transfer the ownership of traded securities in
book entry form by debiting the selling clients' CDS Account and
crediting the buying clients' CDS Account with the same volume of the
securities traded.
8.20.2 The ownership transfer is effected by matching the Sell Transfer Form
[Form TD 1(d)] and Purchase Transfer Form [Form TD 1(b)] by using the
DSE Trading Confirmation Slip Number as the key matching identity.
8.20.3 Where the selling client sells less securities than those held in the clients
CDS account, the client shall still own the remaining balance.
8.20.4 The Company Registrar shall not issue replacement certificate(s) until
notified by the DSE.
8.20.5 Note:
(a) No transfer forms will be sent to the Company Registrars.
(b) All transfers will be undertaken internally through the CDS.
(c) Updated registers of all securities holders will be sent to the
Company Registrars on a regular basis or at such other times as
may be requested by the Issuers.
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(d) The Company Registrars shall be required to provide the DSE with
all important dates having a bearing on corporate action which
affect the entitlements of CDS accounts holders.
8.21
WITHDRAWING CERTIFICATES FROM THE CDS
8.21.1 General
(a)
In principle, CDS account holders are permitted to withdraw all
or part of securities they hold in their accounts.
(b)
However, once a request for withdrawal of securities has been
made, no dealings in those securities shall take place.
8.21.2 Withdrawal Procedure
(a) A client who wishes to withdraw securities from a CDS account shall
complete and sign a Withdrawal Request Form[CDS 2(b)] provided
by an Authorised CDS Operator.
(b) The Authorised CDS Operator shall verify that a client who has
completed a Withdrawal Request Form holds the respective
securities in the relevant account and in sufficient quantities to cover
the volume of securities which are the subject of withdrawal.
(c) A separate Withdrawal Request Form shall be completed for each
security to be withdrawn from a CDS account.
(d) Complete Withdrawal Request Forms and respective Transfer of
Shares From DSE Custody Forms [TD 1(e)] duly signed shall be
delivered by an Authorised CDS Operator to the DSE between
15.30 and 16.00 hours.
(e) If there is any error on the Withdrawal Request Form, the DSE will
inform the Authorised CDS Operator of the error and instruct the
operator to retrieve the Withdrawal Request Form for correction and
re-submission.
(f) Upon receipt of a duly completed Withdrawal Request Form, the
DSE shall freeze the CDS account or portion of securities to be
withdrawn within the account.
(g) After freezing a CDS account or a portion of securities applied to be
withdrawn in a CDS account, the DSE shall complete the Transfer
From DSE Custody Form [TD 1(e)] and present it to the Company
Registrar of the Issuer together with the related Block Certificate.
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(h) After receipt of a copy of a Withdrawal Request Form, Transfer
From DSE Custody Form and related Block Certificate, the
Company Registrar shall within fourteen days issue an adjusted
Block Certificate in the name of the DSE less the quantity of
securities withdrawn and another certificate for the withdrawn
securities in the name of the withdrawing CDS account holder.
(i) The Company Registrar shall transmit to the DSE the adjusted
Block Certificate and the certificate in the name of the CDS account
holder to the DSE which shall immediately after receipt of the
certificates, debit the CDS account of the withdrawing client and
present the certificate in the name of the client to the respective
Authorised CDS Operator for onward transmission to the client.
(j) An Authorised CDS Operator who receives a certificate withdrawn
by a client from the CDS shall acknowledge receipt of the certificate
by signing a DSE Delivery Confirmation Slip.
(k) Any error or discrepancy in a certificate shall be immediately
reported to the DSE by the Authorised CDS Operator.
8.22
MORTGAGING OF SECURITIES
8.22.1 General
(a)
In principle, deposit of securities to DSE custody does not bar
the holder from mortgaging such securities as collateral.
(b)
Where deposited securities are mortgaged as collateral to a
lender by a borrower, a borrower is not necessarily required to
deliver physical certificate(s) to a lender as the mortgage can be
effected through entries in the CDS records.
(c)
Once securities deposited in the DSE have been mortgaged as
collateral, they cannot be traded while they are still held as
collateral.
(e) Authorised CDS Operators have a professional duty and
responsibility to inform their clients of the nature, implications and
risks of a mortgage of securities held in the custody of the DSE
Central Depository.
8.22.2 Mortgaging Procedure
(a)
Every investor (borrower) wishing to mortgage securities
deposited in the CDS as collateral shall approach an Authorised
CDS Operator.
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(b)
The Authorised CDS Operator shall provide the investor with the
DSE Mortgage Request Form [Form MR 1] and the Mortgage
Transfer of Shares Form [TD 1(c)]
(c)
The investor (borrower) shall complete and sign the MR1 form
in triplicate and sign the Mortgage Transfer of Shares Form [TD
1(c)].
(d)
The investor (borrower) shall deliver the forms to the lender and
obtain the lender's signature.
(e)
After obtaining the lender's signature the borrower shall, through
the Authorized CDS Operator, deliver the forms to the DSE for
STAMPING.
(f)
The stamped copies shall be distributed to both the borrower
and lender through the Authorised CDS Operator.
(g)
The DSE shall make entries to the borrower's depository
account to reflect the mortgage.
(h)
After the entries have been made, the mortgage of securities is
completed and the securities are segregated within the
depository system from the borrower's accounts that are used
for settlement of trades.
(i)
During the period in which the collateral is mortgaged the
securities cannot be used for settlement by either party (i.e. the
borrower as well as lender).
(j)
Authorised CDS Operators shall maintain records of all
mortgages effected on securities held in the CDS by their
clients.
8.22.3 Entitlement on Mortgaged Securities
The DSE shall ensure that entitlements (dividends, interests, bonus
shares, rights etc) on securities mortgaged as collateral shall be
transmitted to the borrower as the "owner" of the securities as long as
the said securities have not been duly seized by the lender.
8.22.4 Access to Collateral by the Lender
(a)
The lender may seize the securities deposited in the CDS which
have been mortgaged as collateral by the borrower by
submitting a written request to the DSE.
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(b)
A lender shall through an Authorised CDS Operator, submit to
the DSE a request to seize the securities mortgaged as
collateral which shall consist of:
(i)
(ii)
(iii)
A Mortgage of Shares Transfer Form [TD 1(c)]duly
signed in blank by the borrower;
A CDS Depository Account Application Form (if account
does not exist); and
A copy of the Mortgage Request Form.
(c)
The DSE shall make entries into the depository account to move
the seized collateral to the lender's depository account.
(d)
The DSE shall, through the Authorised CDS Operator, inform
the borrower of the seizure of the mortgaged securities.
8.22.5 Mortgage Release
(a) To release the collateral, the borrower shall complete and sign the
DSE Mortgage Release Form (Form MR 2) in triplicate.
(b) The borrower shall deliver the Mortgage Release Forms [MR 2] to
the lender for signature before delivering them to the DSE through
the Authorised CDS Operator.
(c) The Authorised CDS Operator shall, deliver the Mortgage Release
Forms to the DSE together with a copy of the Mortgage Request
Form that registered the collateral at the CDS.
(d) The DSE shall make entries in the depository records to release
the specified amount of securities mortgaged as collateral back to
the borrower's account (i.e. de-segregate them).
(e) After the entries have been made, the DSE shall deliver, through
the Authorised CDS Operator, duly stamped copies of the
Mortgage Release Forms (MR 2) to the borrower and lender.
(f) Upon release of a mortgage a lender shall surrender to the
borrower form TD 1(c) originally executed by the borrower to
facilitate collateral.
8.23
SETTLEMENT OF DSE TRADES
8.23.1 Settlement of a trade involves the delivery of securities against receipt of
payment (Delivery Versus Payment).
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8.23.2 Trades that are executed through the facilities of the DSE are recorded
in a computer system for eventual settlement.
8.23.3 Trades executed at the DSE are settled in a (T+5) settlement cycle.
8.23.4 Settlement of trades at the DSE employs a trade-for-trade settlement
mechanism. Each trade is considered separately for settlement. To
settle, a selling LDM must have enough securities in his client's DSE
depository account. The DSE settlement system will debit the depository
account for the sold securities and credit the depository account of the
buying client.
8.23.5 As each trade is settled, the DSE system will record the amount of
fundsowed by the buying LDM and the amount of funds owed to the
selling LDM. As each trade is settled, the system will up-date the
running net balance for each counterpart.
8.23.6 On T+5, the DSE LDMs' Clearing Banks will either deliver or receive a
single net payment to or from counter- parties.
8.23.7 Settlement Procedures
(a)
Each LDM of the DSE shall appoint a bank which maintains a
current account at the Bank of Tanzania for purposes of settling
transactions executed at the DSE.
(b)
The DSE shall enter the details of trades executed into its
computer system and produce a Trade Confirmation Report for
each trading session.
(c)
The Trade Confirmation Report shall contain the following
details;
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
Trade date;
LDMs identification;
Counterpart's identification;
Security traded;
Quantity bought or sold;
Price per security;
Trading Confirmation Slip No.;
Consideration; and
Delivery and settlement date.
(d)
The DSE shall transmit a Trade Confirmation Report to each
LDM at 15.00 hours every trading day.
(e)
Each LDM shall carefully review the Trade Confirmation Report
to ensure that the details of trades have been captured
correctly. Any error shall be communicated to the DSE
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immediately and not later than 10.00 hours on the business day
following execution of the trade (T+1).
(f)
To effect the trade corrections, an LDM shall adopt the following
procedure;
(i)
(ii)
Point out and clearly mark any correction on the Trade
Confirmation Report;
Attach a Trade Correction Slip duly signed by an
authorised person;
(iii)
Deliver the Trade Correction Slip accompanied by a
copy of the corrected Trade Confirmation Report by
hand or fax to the DSE not later than 10.00 hours on
the business day following execution of the trade (T+1);
(iv)
Verify that corrections have been made when the DSE
sends a notice of correction.
(g)
The DSE shall send a confirmed Trade Report to each Clearing
Bank on the second day following execution of a trade (T+2).
(h)
The DSE shall, on the third business day after the trade date,
review the settlement report to obtain the net amounts owed
between Clearing Banks of the LDMs.
(i)
At 09.00 hours on (T+4), the DSE shall send a confirmed Trade
Report to instruct the LDM's Clearing Banks to effect payment
transfers between LDMs' Clearing Banks on T+5.
(j)
The LDM’s Clearing Bank shall, at 11.00 hours on the
settlement date debit or credit the Trust accounts of the LDMs
held at the Clearing Banks with a net payment due and net
receipt due respectively as per instructions of the DSE.
(k)
At 11.00 hours on settlement date, the DSE shall transfer
ownership of securities in its book-entry records by debiting the
CDS accounts of the selling clients and crediting the CDS
accounts of the buying clients.
(l)
At 15.00 hours on settlement date, the Clearing Bank shall
notify the DSE of the money movements that have taken pace
based on the instructions provided by the DSE.
8.23.8 Failure to Deliver Securities
(a) General
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(i) It is understood that under the DSE Rules selling LDMs cannot
proceed to the DSE Trading Floor to sell securities before they
have verified their selling clients' holdings at the CDS.
(ii) However, it is possible that due to negligence, LDMs may not
verify the holdings of their selling clients at the CDS and
therefore leading to a failure to deliver the required securities on
settlement dates.
(iii) It is therefore necessary that punitive and procedural measures
be taken to ensure that LDMs diligently discharge their
verification obligations.
(iv) A buy-in procedure has been installed.
(b) Buy-In Procedure
(i) If a trade fails to settle on settlement day due to insufficient
securities in the CDS account of the seller (failure to deliver), a
fine shall be imposed on the LDM who effected the trade and a
buy-in will be conducted by the DSE against the defaulting LDM.
(ii) The DSE shall immediately when available, purchase the
necessary quantity of securities from the market at the market
price. Where the securities are not readily available, the DSE
shall continue to source for such securities from the market
during subsequent trading sessions.
(iii)
The LDM against whom the buy-in is conducted shall
be responsible to pay all the expenses associated with the buyin and such other fine(s) as may be prescribed by the Council.
(iv) The securities purchased by the DSE shall be used to complete
the failed settlement.
8.23.9 Failure to Settle (Payment) Trades
(a) General
(i) It is understood that buying LDMs cannot proceed to the DSE
Trading Floor to buy securities before they have received
payment from their buying clients.
(ii) However, it is possible that due to negligence, LDMs may not
receive payment from their buying clients and therefore leading
to a failure to settle payments for confirmed trades.
125
(iii) It is therefore necessary that punitive and procedural measures
be taken to ensure that LDMs diligently discharge their payment
receipt obligations.
(iv) A sell-out procedure has been installed.
(b) Sell-Out Procedure
(i) If an LDM fails to effect payment for bought securities during
settlement day, a fine shall be imposed on the LDM who
effected the trade and a sell-out will be conducted by the DSE
against the defaulting LDM.
(ii) The DSE shall immediately sell the necessary quantity of
securities to the market at the market price. Where the
securities are not readily bought, the DSE shall continue to offer
such securities to the market during subsequent trading
sessions.
The LDM against whom the sell-out is conducted shall
be responsible to pay all the expenses associated with the sellout and such other fine(s) as may be prescribed by the Council.
(iv) The funds obtained by the DSE shall be used to complete the
failed settlement.
(iii)
8.23.10
Backup Arrangements
(A) GENERAL
(i) It is understood that backup facilities for CDS records
are essential to maintain the continuity of activities in
case of system failures or other disaster.
(ii) The DSE as well as Authorised CDS Operators will be
obliged to maintain backup facilities.
(b) BACKUP
(i) The DSE shall maintain an off-site backup of CDS
operating system and the records.
(ii) Authorised CDS Operators shall also maintain in-house
backup records of CDS accounts which are within their
domain (i.e. for themselves and their clients).
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(iii) The existence of backups by Authorised CDS
Operators shall be verified by the DSE from time to
time.
8.23.11 LEGAL PROCEEDINGS
(a) General
(i) It is recognised that disputes relating to securities held in the
custody of the DSE may occur.
(ii) Where such disputes occur, representations may be made by
the DSE on the state of CDS accounts at particular times.
(b) Testimony by DSE
In the event of a dispute relating to securities held in the CDS the
Chief Executive of the DSE or his designated representative may
upon being duly summoned by a Court or Tribunal, appear before
such Court or Tribunal and testify as to the state of holdings in the
CDS.
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DAR
CHAPTER NINE
SALAAM STOCK EXCHANGE (LISTING OF
FOREIGN COMPANIES) RULES, 2003
ES
9.0 Interpretation
In these Rules the following words shall have the meanings thereby assigned;
“Approved stock exchange” means a stock exchange approved under the Capital Markets and
Securities Act, 1994.
“Authority” means the Capital Markets and Securities Authority established by the Capital
Markets and Securities Act, 1994.
“DSE’ means the Dar es Salaam Stock Exchange.
“Foreign company” means a company incorporated outside the United Republic of Tanzania.
9.1
Cross Listing of Securities
9.1.1
A company already admitted to a listing in a recognised stock exchange may, subject
to compliance with the listing requirements of the DSE and approval of the
Authority apply for a cross listing at the DSE.
9.1.2
An application for cross listing of securities at the DSE shall simultaneously be made to
the Chief Executive of the Authority and Chief Executive of the DSE by a sponsoring
Licensed Dealing Member of the DSE.
9.1.3
An application for cross listing of securities shall be accompanied by;
(a) An Information Memorandum containing information prescribed under the Capital
Markets and Securities Act, 1994;
(b) A Letter of No-objection from the stock exchange of primary listing;
(c) A Letter of No-objection from the capital markets regulatory authority of the country
of primary listing; and
(d) A Legal Opinion by an Advocate practicing in Tanzania.
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9.2 Cross Listing Fee
9.2.1
Upon admission to a listing, a cross listed company shall pay a listing fee
amounting to 0.1% of the market capitalisation subject to a minimum of one million
shillings and maximum of ten million shillings.
9.2.2
For every year during which a listing subsists, a cross listed company shall pay an
annual listing fee amounting to 0.05% of the market capitalisation subject to a
minimum of two million shillings and a maximum of ten million shillings.
9.3 Continuing Listing Requirements
A cross listed company shall comply with all the continuing listing requirements of the DSE.
9.4
Transactions in Cross Listed Securities.
Transactions in cross listed securities shall be subject to the Clearance, Settlement and
Depository Rules of the DSE.
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CHAPTER TEN
DAR ES SALAAM STOCK EXCHANGE (FOREIGN INVESTORS)
RULES, 2003
10.0
Interpretation
In these Rules the following words shall have the meanings thereby assigned:
“Authority” means the Capital Markets and Securities Authority established by the Capital
Markets and Securities Act, 1994.
“Central Depository System” means the Central Depository System installed at the DSE.
“DSE” means the Dar es Salaam Stock Exchange.
“foreign investor” means a person who or a body corporate which intends to acquire or has
acquired securities in a listed company and –
(a) in the case of an individual, means a person who is not a citizen of the United Republic of
Tanzania; and
(b) in the case of a body corporate, means a body corporate in which more than fifty percent of
its shareholding is held by(i) persons who are not citizens of the United Republic of Tanzania; or
(ii) body or bodies corporate not incorporated in the United Republic of Tanzania;
10.1
Permission for Investment by Foreign Investors
A foreign investor may subject to the limits prescribed in the Capital Markets and Securities
(Foreign Investors) Regulations, 2003, acquire the securities of an issuer in respect of which
the issuer is making an application for listing or which are already listed at the DSE.
10.2
Appointment of Custodian
10.2.1
A foreign investor shall prior to the acquisition of securities at the DSE appoint
a custodian who is an Authorized CDS Operator.
10.2.2 The custodian shall be responsible for maintaining a record of securities of a
respective foreign investor as well as implementing duly received instructions of the
investor
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10.3
Deposit of Certificates (Securities) Into the Central Depository System
10.3.1 Where foreign investors acquire securities during an Initial Public Offer or Initial Issue,
those securities shall be deposited by the issuer into the Central Depository System of
the DSE.
10.3.2 Securities acquired by foreign investors during secondary trading at the DSE shall also
be deposited into the Central Depository System of the DSE.
10.3.3 Upon the entry into force of these Rules, all foreign investors who hold shares in
companies listed at the DSE shall deposit those shares into the CDS of the DSE
through an Authorised CDS Operator
10.3.4 Securities deposited into the Central Depository of the DSE shall be held in
accordance with the Central Depository Rules of the DSE.
10.3.5 The DSE shall, by the last day of every month furnish to the Authority a report showing
details of the holdings of securities by foreign investors as at the last day of that
month.
10.3.6 A Licensed Dealing Member shall –
(a)
on every application for the securities of an issuer; or
(b)
on the transfer of the securities of a listed company to an investor,
declare whether the applicant or the transferee, as the case may be, is a citizen of
Tanzania or a foreign investor or, foreign institutional investor.
10.3.7 No Licensed Dealing Member shall effect an order for the purchase of securities of a
listed company if such purchase will result in a breach of the limits prescribed for
foreign investors under these Rules.
10.3.8 The DSE shall prepare in respect of each day a report showing(a)
the number of securities of each listed company traded on that day: and
(b) the number of securities of each listed company then available for purchase by
foreign investors, and shall furnish such report to the Authority before the
commencement of trade on the next trading day.
10.3.9 The DSE shall publish every report prepared under this Rule at its public gallery.
131
CHAPTER ELEVEN
INVESTOR PROTECTION
FIDELITY FUND
11.0
Preliminary
The Exchange has established a Fidelity Fund which shall be used for the purposes of
compensating investors who will suffer pecuniary loss as a result of or in connection with any
default by the LDMs.
11.1
Claims
11.1.1 Only an investor may make a claim against the Fund and he shall submit such claim to
the Chief Executive of the Exchange.
11.1.2 Such claim shall be confined to loss or misappropriation by the LDM of cash or
securities held by such a firm on behalf of the investor in connection with, arising out
of, or in contemplation of transactions in securities listed on the Exchange where(a)
it is established that an investor has made a claim in writing to his LDM by
registered letter and this has not been satisfied within a maximum period of
two (2) weeks from submission of the claim;
(b)
upon receipt of a claim the Chief Executive shall ask the claimant to fill in an
Application for Declaration of Default. The Chief Executive shall submit such
application to the Council.
11.1.3 The Council shall cause a copy of the Application for Declaration of Default to be
served on the LDM at its registered place of business. The respondent shall have a
right to answer in writing to the facts alleged in the said application within seven (7)
days from the date of service of the application and shall cause a copy of such answer
to be served on the Council.
11.1.4 On expiry of the period aforementioned the DSE Management shall file the Application
with the Council together with any relevant documents.
11.2
Declaration of Default
11.2.1 The Council may, upon an Application for a Declaration of Default by an investor,
declare the LDM to be in default if the firm(a)
is guilty of any negligent act, error, omission or breach of professional duty; or
132
(b)
is guilty of any dishonest or fraudulent act or omission perpetrated with the
manifest intent to cause an investor to sustain a pecuniary loss; or
(c)
has suspended payment of monies or outstanding balances due to investor or
clients as required.
11.2.2 Subject to the rules of Natural Justice, the Council shall regulate its procedures in
determining a Declaration of Default.
11.2.3 A declaration of Default shall be effective as from the day it is given in the decision of
the Council, which shall therein premise the reasons leading to its deliberation.
11.2.4 The Council shall convey its deliberations to the DSE Management and the DSE
Management shall take the appropriate disciplinary action it deems necessary as per
the Council’s directive(s).
11.3
Default Notice
The Chief Executive shall post a copy of the Default Notice on the Notice Board of the
Exchange forthwith and shall serve such Default Notice on the LDM in default.
11.4
Application for Compensation
11.4.1 Investors who consider that they may be entitled to make a claim for compensation
under these Rules shall complete the Application for Compensation Form and submit it
to the DSE without delay but not later than four (4) months from the date of issue of the
Default Notice.
11.4.2 Each Application for Compensation shall be submitted to the Disciplinary Committee
for its deliberations.
11.5
Exclusion from Compensation
11.5.1 A Claim for Compensation shall not be considered if the investor is adequately
protected in respect of his loss under any other existing compensation or insurance
scheme and the Council may postpone its decision in relation to a claim for
compensation until the amount payable under such other scheme is determined.
11.5.2 The following may constitute grounds for rejecting an Application for Compensation
from an investor, but this list is not intended to be exhaustive;
(a)
if the investor has contributed in any way to the financial difficulties of the firm
in default; or
(b)
if the application is found to contain any inaccuracy or omission, unless this is
clearly immaterial or is shown by the investor to be wholly innocent; or
133
(c)
11.6
where, in the opinion of the Council, the investor has so conducted himself in
his dealings with LDM in default, as to be in breach of applicable law or
regulations, including these Rules.
Limit of Compensation
11.6.1 The amount which may be paid out to an investor shall be 80% in respect of all claims
which have been made by the investor subject to a maximum of Tshs._____ provided
that the total compensation paid from the Fund in any one year shall not exceed 50%
of the balance available in the Fund.
11.6.2 Subject to the above limits the Council shall have absolute discretion to determine the
amount of any payment which it may make by way of compensation and may authorise
that compensation in the form of cash or securities as it may deem necessary.
11.7
Reduced or Interim Payments
11.7.1 Where the Council is satisfied that in principle, compensation is payable but considers
that immediate payment in full would not be prudent, having regard to other
applications for grant of compensation made or likely to be made or to any uncertainly
as to the amount of the investor's overall net claim, it may determine to pay an
appropriate lesser sum in final settlement or to make a payment on account.
11.7.2 A payment on account shall be treated as the payment of a compensation sum and
shall not inhibit the Council from making a determination in respect of any balance.
11.7.3 The Council may also determine to make a payment on account or to pay a lesser sum
where the investor has a prospect of recovery in respect of the claim from any third
party or through an application for compensation to any other person.
11.8
Assignment of Rights
11.8.1 As a pre-condition to receiving compensation from the Fund under these Rules, the
investor seeking compensation shall be required to transfer to the Exchange his claim
against the LDM in default.
11.8.2 The investor will be required to subrogate his rights to the Exchange, to the extent that
the claim has been satisfied under these Rules.
11.8.3 Investors, will therefore, be required to sign such documentation as may be necessary
to effect this assignment and to confirm that they have not received any payment from
any other scheme or from the LDM in default since making the claim and prior to any
payment being made to such investor under these Rules.
11.9
Powers of the Council
11.9.1 The Council shall hold, manage and apply monies of the Fund in accordance with
these Rules, although the express powers given do not restrict its general powers of
management.
134
11.9.2 The monies available in the Fund shall be invested from time to time as the Council
directs, having regard to the need for prudence.
11.9.3 The Council may borrow money or otherwise incur indebtedness for the purpose of the
fund, in any way and in any terms it thinks fit, provided that such borrowings do not
exceed the net asset value of the Fund.
11.10 Revenue of the Fund
The revenue of the Fund shall consist of:
(a)
all monies paid to the Exchange by member companies and member firms;
(b)
the interest and profits accruing from the investment of the Fund;
(c)
all monies paid to the Fund by the Exchange;
(d)
all monies recovered by or on behalf of the Exchange in the exercise of any rights of
action;
(e)
all monies paid by an Insurer under a contract of insurance or indemnity entered by the
Council of the Exchange under Section 103 of the Capital Markets and Securities Act,
1994;
(f)
all other monies lawfully paid into the Fund.
11.11 Payment out of the Fund
The payments out of the Fund shall consist of;
(a)
monies as determined and directed by the Council to be paid in settlement of the
investor/s justified claims; and
(b)
any administrative expenses.
11.12 Records
The Council shall cause proper records to be kept in respect of the transactions of the
Fund.
11.13 Cooperation with the Council and Disciplinary Committee
The LDM shall cooperate with the Council and Disciplinary Committee in making available all
information, books and documents and shall otherwise render all such assistants as is
necessary or desirable to assist the Disciplinary Committee to perform these functions under
these Rules.
135
CHAPTER TWELVE
SECURITIES MARKET INDICES
INTRODUCTION
12.0
Securities indices are important statistical tools that enable portfolio managers and other
investors to measure their portfolio’s performance against a commonly used yardstick within
the stock market.
12.1
DEFINITION
An index is a statistical measurement of the performance of a particular group of securities,
using a clearly defined set of rules that makes them comparable regardless of the market
conditions. It measures the movement of securities prices on hourly, daily, weekly, monthly,
quarterly and yearly basis as desired.
12.2
12.3
BENEFITS OF SECURITIES INDICES INCLUDE:
(i)
Summarizes the entire market
An Index is usually composed of companies from all sectors of the economy. The
index provides an easy way to quantify the performance of the stock exchange and
economy as a whole. It is used as a benchmark by investment advisors and individual
investors to compare the results of various investment strategies versus a buy and
hold strategy.
(ii)
Allows for a self-regulating market
Arbitrageurs can easily identify any price discrepancies in the market and correct the
market to ensure prices are accurate.
(iii)
Leading Indicator
Stock prices are equivalent to the present value of future cash flows. If future cash
flows are expected to change (increase or decrease) the index will reflect these
expectations.
(iv)
Marketing Instrument
Outside investors can compare the performance of the exchanges’ index to other
indices around the world. A strong return will increase public awareness, and foreign
investment on the exchange.
INDEX MANAGEMENT COMMITTEE
(i)
There shall be an Index Management Committee composed of market participants to
manage the process of building indices. The composition of this committee shall be
136
structured in such a way that it represents the Exchange, Fund Managers,
Practitioners, Academicians and Stockbrokers. The Committee’s mandate is to ensure
that the management and ongoing operation of the index is independent and
transparent.
12.4
(ii)
The Exchange shall, through the Index Management Committee develop
indices as it deems fit.
its
(iii)
The CMSA shall have access to all the information of the Index Management
Committee.
DUTIES AND RESPONSIBILITIES OF THE INDEX MANAGEMENT COMMITTEE
The duties and responsibilities of the Index Management Committee shall include:
12.5
(i)
To establish the criteria and procedures for selection of the constituents of the DSE
Indices.
(ii)
To determine the base year period and value of the indices.
(iii)
To formulate a scientific and transparent methodology of indices calculation.
(iv)
To review, monitor and maintain periodically the new indices.
(v)
To consider the development of sector indices.
PERIODIC REVIEW OF INDICES CONSTITUENTS
(a)
The Committee shall meet semi-annually or any time as the circumstances may
demand, to review the constituents of the indices. The constituent reviews will be
based on data collected. Details of the outcome of the review shall be published as
soon as possible after the Index Management Committee meeting has concluded.
(b)
The periodic review of constituents will be conducted using the following steps:
(i)
Create database of all securities listed on the Dar es Salaam Stock Exchange;
(ii)
Apply all liquidity tests set out in these Rules;
(iii)
Exclude securities which do not fulfil criteria set out in the Rules;
(iv)
Rank all eligible securities by market capitalisation, largest first and smallest
last;
(v)
Where a greater number of securities qualify to be included in the index than
those qualifying to be removed, the lowest ranking securities presently
included in the index will be removed to ensure that the number of securities
remains constant. Likewise, where a greater number of securities qualify to be
removed from the index than those qualifying for inclusion, the highest ranking
securities which are presently not in the index will be included to match the
number of securities being removed at the periodic review.
137
12.6
(vi)
Adjust share weightings for availability to all investors.
CHANGES TO CONSTITUENT COMPANIES
(a)
Removal and Replacement
(i) If a constituent is de-listed, or ceases to have a firm quotation, or is subject to a
takeover offer which has been declared wholly unconditional or has, in the
opinion of the Index Management Committee, ceased to be a viable constituent
as defined by the Rules, it will be removed from the list of constituents and
replaced by the reserve list security ranking highest by full market capitalisation
as at close of business on the day preceding the inclusion of the replacement
security.
(ii) The removal and replacement are effected simultaneously, before the start of
business on the day following the day on which the event justifying removal was
announced. Announcement after close of business are normally deemed to be
made on the following business day. In the case of a takeover, the qualifying
event is an announcement that the offer has been declared wholly unconditional.
(b)
(c)
Mergers, Restructuring and Complex Takeovers
(i)
If the effect of a merger or takeover is that one constituent is absorbed by
another constituent the resulting company will remain a constituent of the Index,
and a vacancy will be created. This vacancy will be filled by selecting the highest
ranking security from the reserve list as at close of business on the day
preceding the inclusion on the replacement security.
(ii)
If a constituent company is taken over by a non-constituent company, the
original constituent will be removed and replaced by the merged entity. In the
event that the merged entity is ineligible for the DSECI, it will be replaced by the
highest ranking security from the reserve list as at close of business on the day
preceding the removal of the original constituent.
(iii)
If a constituent company is split so as to form two or more companies, then the
resulting companies will be eligible for inclusion as index constituents if their
market capitalisation(s) are large enough to qualify, and if they qualify in all other
respects. The lowest ranking constituent of the index is removed.
New Issues
(i) If, in the view of the Index Management Committee, a new issue is so large that
the effectiveness of the index as a market indicator would be significantly and
adversely affected by its omission, the Committee may decide to include the new
issue as a constituent of the index at the earliest practicable opportunity. In such
a case, the timing of the inclusion of the new constituent will be at the discretion
of the Index Management Committee.
(ii) New issues of companies which do not qualify for early entry but which meet the
criteria for eligible securities will be eligible for inclusion in the next review.
138
(iii) If the Index Management Committee decides to include a new issue as a
constituent security other than as part of the normal periodic review procedure,
this decision must be publicly announced at the earliest practicable time.
(d)
Suspension of Dealing
Where a suspension of a constituent lasts for more than 30 calendar days and in the
opinion of the Index Management Committee is unlikely to return to the market, it will
be deleted from the index. When a stock is otherwise removed following suspension of
its quote, the stock will be removed at its suspension price unless otherwise decided by
the Committee.
(e)
Treatment of re-listing companies
(i) Securities which were removed from the DSECI shares index, which on re-listing
are larger than the smallest constituent of the index, shall be re-instated in the
index at the price at which they were removed and the lowest ranking constituent
of the index will be selected for removal. The addition and deletion of stocks
occur simultaneously, such that there are always 20 constituent companies.
(ii) Securities which on re-listing are smaller than the smallest constituent of the index,
shall then be re-instated in the same index at the price at which they were
removed after the close of the index calculation on the trading day prior to relisting.
12.7
CHANGES TO CONSTITUENT WEIGHTINGS
(i)
Adjustments to reflect a major change in the amount or structure of a constituent
company’s issued capital must be made before the start of business on the day on
which the change takes effect (e.g. the Ex Date for a rights or capitalisation issue).
(ii)
Adjustments to reflect less significant changes (e.g. the issue of an additional block of
shares under an employees’ equity scheme) would be implemented as soon as
possible following the announcement of the change.
139
APPENDIX 1
FEES STRUCTURE
Equities
Consideration
Brokerage
Commission
Transaction Fee
Fidelity Fee
Total Cost to
Investor
On the first Tshs.
10m
1.70
0.28
0.02
2.00
On the next Tshs.
40m.
1.50
0.28
0.02
1.80
On any sum
above Tshs.
50m.
0.80
0.28
0.02
1.10%
Minimum commission = 1,000/=
Bonds
Transaction size
Applicable Commission
Up to Tshs. 40m.
1/16%
On any additional
1/32%
Amount exceeding Tshs. 40m. Minimum
commission
Tshs. 5,000/=
140
APPENDIX 2
APPLICATION FOR LISTING OF SECURITIES AT THE DAR ES SALAAM
STOCK EXCHANGE
………………………………………………………………………………........................................................
(Name of Company)
Hereby applies for the listing of the following securities at the Dar es Salaam Stock Exchange
(hereinafter called “the Exchange”);
………………………………………………………………………………........................................................
1.
The
Company
was
established
in
(country)
……………………………………………………………...............................................................
Under (Law) ………………………………………on (date)…………………………………………….
Issued
with
incorporation
certificate
number
(if
……………………………………………………...................................................................
2.
any)
Address of the registered office
………………………………………………………………………………………………………………
……………………………………………………………………………………………………...............
3.
Address of each office at which a Shareholders’ Register is kept
………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………………….
4.
Has application been made for listing on any Stock Exchange?
………………………………………………………………………………………………………………
……………………………………...........................................................................................
(if so, what is the Exchange (s) and the
result)
………………………………………………………………………………………………………………
……………………………........................................................................................
141
5.
Have Certificates been issued and posted to all holders of securities of which listing is
requested?
………………………………………………………………………………………………………………
……………………………………............................................................................................
(if not, state proposed date
issue)…………………………………………………………………...........................................
6.
AUTHORISED CAPITAL
(show separately the number and denomination of each class of shares)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
………………………………………………………………………….........................................
7.
ISSUED CAPITAL
(show separately any different classes of shares, the amount paid up on each class, and the
dividend and voting rights attaching to each class)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
.
How many forfeited shares (if any) does the company hold?
………………………………………………………………………….................................................
Was there any agreement with the company by the vendors or promoters that the whole or part
of any cash consideration should be used for the purpose of applying for shares?
…………………
(if so , give details, and state the number involved)……………………......................................
………………………………………………………………………………………………………………
……………………………………............................................................................................
8.
PARTICIPATION RIGHTS
Have any rights been granted to any person or to any class of persons to participate in any
issue? (if so, give particulars)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
9.
Last day of Financial Year…………………………………………..............................................
142
10.
Month in which Annual General Meeting is usually held……………………...............................
11.
Month(s) in which Dividend (s) is (are) usually paid……………................................................
12.
Full list of shareholders and their holdings as at the date of application.
13.
Details of Directors’ interests in shares or debentures of the company.
13.
(Give a brief history of the company, or if applicable, the Company Group and details of issues
by the Company of securities of all classes in the last five years, indicating issues for
consideration other than cash.
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
14.
BUSINESS
(State the main business , the main products produced or service performed, whether a
material part of the business is dependent upon patents, trade marks, assets or rights of a
similar nature and if the Company or Group carries on differing operations, a statement
showing the contributions ( figure or percentage) of such differing operations to its trading
results to be supplied.
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
15.
PROSPECTS
(Give Director’s estimate of profits from each class of business during the trading year and any
dividends they expect to pay therefrom. Also state any factors known to the Directors which
may affect profits in the long term).
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
16.
SUBSIDIARIES AND ASSOCIATES*
(Give a list of all subsidiaries stating in each case, the name, nature of business and
percentage holding. Similar details should be provided for every other company in which the
company hold more than ten percent of the ordinary share capital).
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
…………………………………………………………………………............................................
17.
OFFICES*
(List Managing Director , the Manager and the Secretary. State the duration of the
appointment of any Director not subject to retirement by rotation. State if any Director is entitled
to any participation in profits, and if so , the extent thereof).
143
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
.
18.
ACCOMPANYING DOCUMENTS
(a) Evidence of approval by the Capital Markets and Securities Authority of the prospectus and
application for listing.
(b) Copies of all contracts referred to in the prospectus, etc including underwriting agreement
(if any) and /or the sponsorship agreement between the issuer and the Nominated Advisor
in case of applicants for listing on the Enterprise Growth Market.
(c) Memorandum and Articles of Association. The MEMARTS should contain provisions(s)
relating to observance of good corporate governance principles as per the guidelines on
the same issued by the Authority.
(d) Specimen certificate for each class of security to be listed
(e) Annual accounts for the three latest years, except to the extent that they are reflected in a
prospectus or memorandum of sale . In case a company applying for listing has no track
record, it should show evidence as to the appointment of Audit Committee.
(f) Copies of all prospectuses and memoranda of sale issued in the last three years.
(g) Letter of Undertaking.
(h) Application and Listing Fees.
(i) Letter of undertaking by Nominated Advisor as per format and content provided under
Appendix 17 to these Rules.
1
The Common Seal of the Company is hereunto affixed in the presence of :
2
Director
3
Director/Secretary ………………………………………..
4
Date
5
*
6
+ if a company has traded for less than three years, accounts since incorporation should be
submitted.
…………………………………………
……………………………………….
if a prospectus is to accompany this application, please ignore these sections.
7
144
APPENDIX 3
LETTER OF UNDERTAKING TO COMPLY WITH LISTING
REQUIREMENTS OF THE DAR ES SALAAM STOCK EXCHANGE
The Chief Executive Officer
Dar es Salaam Stock Exchange Limited,
P.O. Box 70081
DAR ES SALAAM
………………………………………………………………………………...
(Name of Company)
In consideration of the Dar es Salaam Stock Exchange (“the Exchange”) granting the Company’s
application for the listing of securities described in the Company’s form of Application HEREBY
UNDERTAKE AND AGREE to comply with the continuing obligations of listing on the Exchange set out
in the Annex to this Undertaking, as amended or supplemented from time to time by the listing Rules of
the Exchange.
The above Undertaking has been signed by us;
As……………………………………………………………(Director
(NAME)
…………………………………………………………………
(Secretary)
(NAME)
Pursuant to authority granted to us by Resolution of the Board of Directors of the Company
on…………………………
Date
……………………
Signature………….Director
Date
……………………
Signature………….Secretary
145
APPENDIX 4
CONTINUING OBLIGATIONS OF LISTING
1.0
The Company shall advise the Exchange by written statement delivered by hand or Fax
transmission in accordance with Exchange procedures immediately a decision has been taken
on any of the following matters :1.1
All dividends and/or cash bonuses recommended or declared together with the dates
of closure of register and dates of payment of such dividends or cash bonuses
1.2
The decision to pass any dividend or interest payment.
1.3
The financial results for the financial year and the first six months of each financial year
(interim report) - such results are required to be announced within three months of the
end of the period concerned but are not required to be audited - the format and
contents of such announcements are to be in accordance with guidelines issued by the
Exchange (see Attachment 1 to this annex).
1.4
Short particulars of any of new capital whether to be issued as capitalization or by way
of rights to shareholders.
1.5
Any changes in the Directorate, the Secretary, Auditors and Legal Advisors and the
date of the financial year end.
1.6
Any sale or purchase of assets which could materially alter the company’s business or
capital structure.
1.7
Any other information necessary to enable the shareholders to appraise the position of
the company and to avoid the establishment of a false market in the listed securities.
Such information should not be passed by the company to any third party until it has been
released to the market by the Exchange.
2.0 The Company shall forward to the Exchange as soon as issued:
2.1 11 copies of the Annual Report and Accounts.
2.2 11 copies of half yearly interim statement.
2.3 11 copies of all Resolutions increasing the capital and all notices relating to further issues
of capital or any other circular.
2.4 11 copies of the Chairman’s speech.
3.0 The Company shall pay a quotation fee within 30 days of quotation being granted in respect of
every application for a quotation of bonus, rights or other issues by the Company. We further agree
to pay an annual quotation fee based on the quoted capital of the Company on 1 st July, of every
calendar year.
146
4.0 We agree to recognize and register only those transfers of the quoted shares where the
transactions have gone through one of the members of the Dar es Salaam Stock Exchange.
5.0 The Company agrees: 5.1 To declare dividends and announce bonus or rights issues not less than three weeks prior to
the first date on which the Registers are to be closed for determining the shares of pari
passu with the exception of the dividend declared at the time of making the issue or the
next dividend.
5.2 To apply prior to issue for quotation in respect of all bonus or rights issues or other allotments
even where the new shares rank pari passu with existing quoted shares or pari passu with
exception of the dividend declared at the time of making the issue or the next dividend.
6.0 The Company agrees in relation to its listed Securities: 6.1
To maintain its register of shareholders on the CDs operated by the DSE in
accordance with the DSE Rules as maybe amended from time to time by the Council.
For transfers to be certified against certificates or against temporary documents and to
be returned on the day of receipt or, should that not be a business day, on the first
business day following their receipt, and split and return renounceable documents
within the same period.
6.2
To provide the rights and benefits of shareholders in the Company, as set out in the
Memorandum and Articles of the Company to all those who are recorded in the Central
Depository System as the beneficial owners of shares in the Company.
7.0 The Company agrees that: 7.1 All circulars to holders of listed securities together with notices of meetings, proxy forms and
notices by advertisement to holders of listed bearer securities will be submitted to the
Exchange in draft form for approval before they are published. Drafts of any proposed
amendment to the Company’s Memorandum and Articles of Association or equivalent
documents will be submitted to the Exchange (but in the case of listed debt securities, this is
only required where the amendment would affect the rights of the holders of such securities.)
7.2 Draft documents should be submitted through the Company’s Sponsoring Member and not by
the company direct. Four copies of each document are required, which should be submitted in
sufficient time for approval and, if necessary, re-submission prior to final printing.
7.3 It is not necessary to submit draft of the annual accounts nor, if the business of the meeting is
only the routine business of an annual general meeting, the notice convening the annual
general meeting of the related form of proxy. It is not necessary to submit a draft of a halfyearly report or preliminary profit statement so long as it conforms with Exchange Guidelines.
7.4 Changes to articles of association must conform with the requirements of Appendix 6 to the
listing Rules.
7.5 Whenever shareholders are sent a notice of meeting which includes any business, other than
routine business at an annual general meeting, an explanatory circular will accompany the
notice or, if the business is to be considered at or on the same day as an annual general
147
meeting, an explanation will be incorporated in the Directors’ Report. An explanatory circular
will also accompany any notice of meeting sent to holders of listed debt securities.
7.6 The company will forward to the Chief Executive six copies of all circulars, notices, reports,
announcements or other documents at the same time as they are issued and four copies of all
Resolutions passed by the company other than Resolutions concerning routine business at an
annual general meeting.
7.7 The Company will send proxy forms, with provision for two-way voting on all Resolutions
intended to be proposed, with the notice convening a meeting of holders of listed securities to
all persons entitled to vote at the meeting.
7.8 Copies of all Directors’ service contracts of more than one year’s duration or, where any such
contract is not reduced to writing, a Memorandum of the terms thereof, must be made available
for inspection at the registered office of transfer office during usual business hours on any
weekday (Saturdays, Sundays and public holidays excluded) from the date of the notice
convening the annual general meeting until the date of the meeting and made available for
inspection at the place of meeting for at least 15 minutes prior to the meeting and at the
meeting. The company must state in a note to the notice convening the annual general meeting
the place and time at which copies or, as the case may be, memoranda of all such service
contracts will be available for inspection or, if so, that there are no such contracts.
7.9 Any information which is notified to the company in respect of the interests ( or changes in such
interests), including options, whether or not held through another party (corporate or
otherwise), of each Director, including his spouse and children under the age of 18 years in,
and, so far as is known to the company, or each holder of 5% or more of , the share capital of
the company, must immediately be notified to the Exchange. The notification to the Exchange
must include the date on which the transaction amount and class of securities concerned.
8.0 A company must ensure that each of its Directors is obliged to notify it of all information needed to
comply with this requirement.
9.0 The company must adopt rules governing dealing by Directors in the listed securities of the
company in terms not less than those of the model code issued by the Exchange.
10.0
Note:
Breach by a Director of a provision of the model code(or of any legislation concerning insider
dealing) could result in the Council ruling that the Director is not a fit person to be a Director of
a listed company and could affect the suitability of the company for continued listing.
148
ATTACHMENT 1
GUIDELINES ON HALF –YEARLY REPORTS AND PRELIMINARY
PROFITS STATEMENTS OF THE FULL YEAR.
1.
The half –year report of preliminary profits statement of the full year must consist of figures
and, in the case of the half-yearly report, an explanatory statement relating to the group’s
activities and profit or loss during the relevant period.
2.
The figures, in table form, must state at least the following:a)
net turnover;
b)
profit or loss before taxation and extraordinary items;
c)
taxation on profits (Government taxation and , if material, overseas and share of
associated companies to be shown separately);
d)
minority interests;
e)
profit or loss attributable to shareholders, before extra-ordinary items;
f)
extraordinary items (net of taxation);
g)
profit or loss attributable to shareholders;
h)
rates of dividend(s) paid and proposed and amount absorbed thereby;
i)
earnings per share expressed as Tshs. Per share (compared on the figures shown for
profits after taxation as defined in International accounting Standards);
j)
Balance sheet
k)
comparative figures in respect of (a) to (j) inclusive for the corresponding previous
period.
Notes:
i)
Where any of the items specified above are unsuited to the company’s activities,
appropriate adjustments should be made. Where the requirements of this paragraph
are unsuitable to the company’s activities or circumstances, the Council may require
suitable adaptations to be made.
ii)
The Exchange may authorise the omission from a half- yearly report of information
required by items (a), (b),(e), (g) and (so far as it relates to those items) items (j) above
and by 3, below if they consider that disclosure of such information would be contrary
to the public interest or seriously detrimental to the company, provided that, in the latter
case, such omission would not be likely to mislead the public with regard to facts and
circumstances, knowledge of which is essential for the assessment of the shares in
question. The company or its representatives will be responsible for the correctness
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and relevance of the facts on which any application for such exemption is based. The
Council may authorize the omission from a half–yearly report of any other information
and from the preliminary profits statement of any information either on the grounds
referred to above or if they consider such omission otherwise necessary or
appropriate.
3.
The explanatory statement in the half-yearly report must include any significant information
enabling investors to make an informed assessment of the trend of the group’s activities and
profit or loss together with an indication of any special factor which has influenced those
activities and the profit or loss during the period in question, and enable a comparison to be
made with the corresponding period of the preceding financial year. It must also, as far as
possible, refer to the group’s prospects in the current financial year.
4.
Where the accounting information given in a half –yearly report has been audited that fact must
be stated. If the accounting information contained in a half –yearly report has been audited by
the company’s auditor, his report thereon including any qualifications must be set out in the
half- yearly report.
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APPENDIX 5
CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED
COMPANIES
1.0 The purpose of the code is to provide protection against misinformed criticism both of the company
and individual directors, it is against the law to deal on the basis of ‘insider’ information: i.e material
information which is not generally available to the public.
2.0 Directors are always thought to be in possession of more information than can at any particular
time be published. Accordingly they must accept that they cannot at all time feel free to deal in their
companies’ securities, even when legal obligations would not prohibit them from doing so.
3.0 In order to avoid this criticism the Council considers it undesirable for directors to buy or sell their
company’s securities:
(a) where a director for his own protection, should be told not to deal because there is a price
sensitive matter under discussion of which he is himself unaware (perhaps because it has
not yet been made known to the board) which is likely ultimately to call for an exceptional
announcement.
(b) The periods immediately prior to the regular announcements of results and dividends.
4.0 The purpose of the model code is to give guidance on these two occasions so as to enable
companies to establish an agreed procedure which would provide general protection against
misinformed criticism both for the company and for the individual directors, given that, under legal
obligations, a director might otherwise be free to deal.
5.0 The Council sees the model code as setting a minimum standard of good practice against which
companies should measure their own company codes. The model code should therefore be seen
as setting guidelines rather than rigid rules to be followed in every detail.
6.0 The following model rules should be used as guidelines for companies in formulating their own
codes:
6.1 Directors shall not deal in their companies’ securities on considerations of a short-term
nature
6.2 A director shall not deal in any of the securities of the company at any time when he is in
possession of unpublished price-sensitive information in relation to those securities.
6.3 The same restriction shall apply to dealings by a director in the securities of any other listed
company when by virtue of his position as a director of his own company, he is in
possession of unpublished price-sensitive information in relation to those securities.
7.0 At other times, a director WHO IS NOT PROHIBITED FROM DOING SO BY LEGAL
OBLIGATIONS can feel free to deal subject to the provisions of the rules which follow:7.1 Director should not deal in any securities of his own company without first notifying the
chairman (or other director (s) appointed for the specific purpose), and receiving
acknowledgement. In his own case chairman should first notify the board at a board
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meeting, or alternatively notify the other director(s) appointed for the purpose and receive
acknowledgement.
7.2 Immediately following any dealing by him (or in which he has material interest) a director
shall notify details of the dealing (including number of shares, price and date of transaction)
to the person appointed to receive notification by him under rule 2.1 above and shall
receive an acknowledgement.
7.3 The procedure established within the company should, as a minimum, provide for there to
be a written record maintained by the company that the appropriate notification (including
notification of any dealing ) was given and acknowledged, and for the director concerned to
have written confirmation to that effect.
7.4 During the periods of two months immediately preceding the preliminary announcement of
the company’s annual results and of the announcement of the half-yearly results together
with dividends and distributions to be paid or passed a director should not purchase any
securities of the company nor should he deal in securities in the circumstances set out in
basic principle 5 above; nor should he sell any such securities, unless the circumstances
are exceptional, for example, where a pressing financial commitment has to be met. In any
event he must comply with the procedure in rule 2 above.
7.5 Companies producing quarterly results should consult the Chief Executive on the
formulation of modified dealing procedures appropriate to their case.
7.6 The restrictions on dealings by a director contained in this code should be regarded as
equally applicable to any dealings by the director’s spouse or by on behalf of any infant
child and any other dealings in which he has a material interest. It is the duty of the
director, therefore, to seek to avoid any such dealing at a time when he himself is not free
to deal.
7.7 Any director of the company who acts as trustee of a trust should ensure that his cotrustees are aware of the identity of any company of which he is a director so as to enable
tem to anticipate possible difficulties. A director having funds under management should
likewise advise the investment manager.
7.8 Any director who is a beneficiary, but not a trustee, of a trust which deals in securities of
the company should endevour to ensure that the trustees notify him after they have dealt in
such securities on behalf of the trust, in order that he is turn may notify the company. For
this purpose he should ensure that the trustees are aware of the companies of which he is
a director.
8.0 A list of directors’ dealing in the securities of the company since the date of the previous list should
be circulated to members of the board with the board papers.
9.0 The directors of a company should as a board and individually endevour to ensure that any
employee of the company or director or employee of a subsidiary company who, because of his
office or employment in the company or a subsidiary, is likely to be in possession of unpublished
price-sensitive information in relation to the securities of any listed company, deals in those
securities in accordance with this model code.
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APPENDIX 6
REQUIREMENTS FOR MEMORANDUM AND ARTICLES OF
ASSOCIATION
1.
GENERAL
The Regulations of all companies seeking admission to the Official List of the Exchange must
contain the various provisions as set out in this Part. In addition to complying with the
provisions of this Part, applicant companies must comply with the provisions of the Companies
Act, 2002.
2.
CAPITAL
2.1
The company shall not issue shares to transfer a controlling interest without prior
approval of shareholders in general meeting.
2.2
A director may participate in an issue of shares to employees only if he holds office in
an executive capacity and shareholders in general meeting have approved of the
specific allotment to be made to such director.
2.3
The total proceeds from the issue of preference shares shall not exceed the total
proceeds from the issue of ordinary shares at any time.
2.4
The rights attaching to shares of a class other than ordinary shares shall be expressed.
2.5
Whether the company has power to issue further preference capital ranking equally
with, or in priority to preference shares already issued, shall be indicated.
2.6
Preference shareholders shall have the same rights as ordinary shareholders as
regards receiving notices, reports and balance sheets, and attending general meetings
of the company.
Preference shareholders shall also have the right to vote at any meeting convened for
the purpose of reducing the capital, or winding up, or sanctioning a sale of undertaking,
or where the proposition to be submitted to the meeting directly affects their rights and
privileges, or when the dividend on the preference shares is in arrears for more than
six months.
2.7
Capital paid on shares in advance of calls shall not whilst carrying interest, confer a
right to participate in dividends.
2.8
Offers of new shares to other than existing shareholders must be approved by an
ordinary resolution of the company in accordance with the Companies Act, 2002.
2.9
New shares shall be offered to the existing shareholders of the company in proportion,
as nearly as the circumstances admit to the amount of the existing shares to which
they are entitled. The offer shall be made by notice specifying the number of shares
offered, and limiting a time within which the offer, if not accepted, will be deemed to
have been declined. After expiration of that time, or on the receipt of an intimation from
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the person to whom the offer is made that he declines to accept the shares offered, the
directors may dispose of those shares in such manner as they think more beneficial to
the company. The directors may likewise so dispose of any new shares which (by
reasons of the ratio which the new shares bear to shares held by persons entitled to
an offer of new shares) cannot, in the opinion of the directors, be conveniently offered
under this sub-paragraph.
2.10
3.
Subject to the provisions of the Companies Act, 2002, if any share certificate shall be
defaced, worn out, destroyed, lost or stolen, it may be renewed on such evidence
being produced and a letter of indemnity (if required) being given by the shareholder or
by an LDM of the Exchange acting on behalf of their client, as the directors of the
company shall require, and (in case of defacement or wearing out) on delivery up of
the old certificate and in any case on payment of such sum not exceeding Shs.500/=
as the directors may from time to time require. In the case of destruction, loss or theft a
shareholder or person entitled to whom such renewed certificate is given shall also
bear the cost of the loss and pay to the company all expenses incidental to the
investigations by the company of the evidence of such destruction, loss or theft.
FORFEITURE AND LIEN
The Company’s lien on shares and dividends from time to time declared in respect of such
shares, shall be restricted to unpaid calls and installments upon the specific shares in respect
of which such moneys are due and unpaid, and to such amounts as the company may be
called upon by law to pay in respect of the shares of the member of deceased member.
4.
5.
TRANSFER AND TRANSMISSION
4.1
The company shall accept for registration transfers in the form approved by the Council
including the electronic transfer of shares in the CDS.
4.2
Any fee charged by the company for the subdivision, consolidation, exchange or
registration of securities shall not exceed such rates as are from time to time specified
by the Council.
4.3
There shall be no restriction on the transfer of fully paid securities which are listed or
are to be listed in the case of a limited liability company, except where required by law.
4.4
Any Regulations which entitle a company to refuse to register more than three persons
as joint holders of a share must be expressed to exclude the case of executors or
trustees of a deceased shareholder.
4.5
The company shall promptly notify the Exchange of any attachment or prohibitory
orders restraining the company from transferring securities out of the names of the
registered holders thereof.
4.6
Transfers of fully–paid shares shall not be required to be executed by or on behalf of
the transferee.
BORROWING POWERS
The scope of, or restriction on, the borrowing powers of the Board of Directors shall be
expressed.
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6.
DIRECTORS
In addition to the provision of the Companies Act, 2002 dealing with the contents of the
Regulations in respect of Directors, the following provisions must be complied with.
7
6.1
Where provision is made for the directors to appoint a person as a director either to fill
a casual vacancy, or as an addition to the Board, any directors so appointed shall hold
office only until the next following ordinary general meeting of the company, and shall
then be eligible for re-election.
6.2
Fees payable to non-executive directors shall be by fixed sum, and not by a
commission on or percentage of profits or turnover.
6.3
Fees payable to non-executive directors shall not be increased except pursuant to a
Resolution passed at a general meeting, where notice of the proposed increase has
been given in the notice convening the meeting.
6.4
A director shall not vote in regard to any contract or proposed contract or arrangement
in which he has directly or indirectly a personal material interest.
6.5
The Company’s regulations must embody the rules relating to the retirement and
appointment of directors of a public company which are contained in the Companies
Act, 2002.
6.6
A Managing Director shall be subject to the control of the Board.
6.7
The continuing directors may act notwithstanding any vacancy in their body, but if and
so long as their number is reduced below the minimum number fixed by or pursuant to
the regulations of the company, the continuing directors may, except in an emergency,
act only for the purpose of increasing the number of directors to such minimum
number, or to summon a general meeting of the company.
6.8
Where two directors form a quorum, the Chairman of a meeting at which only such a
quorum is present, or at which only two directors are competent to vote in the question
at issue, shall not have a casting vote.
6.9
The Company in general meeting shall have power by ordinary resolution to remove
any director (including a managing or other Executive director, but without prejudice to
any claim for damages under any contract) before the expiration of his period of office.
6.10
The company may not make a loan to any director or to a close relative of director and
may not give any guarantee or provide any security for any such loan made by any
other person.
ACCOUNTS
The interval between the close of financial year of the company and issue of the audited
accounts relating to the said year shall not exceed three months.
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8.
WINDING UP
8.1
The basis on which shareholders would participate in a distribution of assets on a
winding up shall be expressed.
8.2
On the voluntary liquidation of the company, no commission or fee shall be paid to a
liquidator unless it shall have been ratified by shareholders. The amount of such
payment shall be notified to all shareholders at least seven days prior to the meeting at
which it is to be considered.
8.3
Where any Mining Company is wound up within twelve months of its shares being first
listed on the Exchange, on a distribution of assets to shareholders share capital issued
for cash shall rank in priority to share capital issued to vendors or promoters for
consideration other than cash to the extent of the cash contribution.
9. ALTERATIONS OF REGULATIONS
Companies admitted to the Official List shall not delete, amend or add to any of their existing
Regulations which have previously been approved by the Exchange, unless prior written approval
has been sought and obtained from the Exchange for such deletion, amendment, or addition.
10. PRINCIPLES OF OF GOOD GOVERNANCE
Companies admitted to the Official list of the Exchange shall be required to adhere to the Principles
of Good Governance as per the Authority’s Guidelines on Corporate Governance for Listed and
Public Companies, 2002.
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APPENDIX 7
ADDITIONAL REQUIREMENTS OF CONTENTS OF PROSPECTUS
GENERAL NOTE:
The following items (except any items in respect of which the Exchange has granted an express
dispensation) must be included in prospectus issued by a company making application for its shares to
be listed in Tanzania but which has no shares already listed in Tanzania. In the case of a company
which has shares already listed and which is making a further issue of shares by way of rights, the
items marked are not applicable.
1.
THE ISSUER, THE PERSONS RESPONSIBLE FOR PROSPECTUSES, THE AUDITORS
AND OTHER ADVISERS
1.1
Name of the Issuer, registered office and head office if different from the registered
office.
1.2
Date of incorporation and length of life of the Issuer, except where indefinite.
1.3
Country of incorporation of the Issuer.
1.4
a)
Legislation under which the Issuer operates and legal form which it has
adopted under that legislation and a brief history of the initial organisation of
the business.
b)
The nature and results of any bankruptcy, receivership or similar proceedings
with respect to the Issuer.
c)
The nature and results of any other material reclassification, merger or
consolidation of the Issuer or any of its significant subsidiaries.
1.5
Place of registration of the Issuer and the number with which it is registered.
1.6
Names, home or business addresses (in the case of legal persons their registered
offices) and functions of the persons giving the declaration required by item 1.7 below
and where they give a declaration only as to part of the Prospectus, an indication of the
part.
1.7
Declaration by the directors of the Issuer in the following form with appropriate
modifications:“The directors of the Company, whose names appear on page {---} accept
responsibility for the information contained in this document. To the best of the
knowledge and belief of the directors (who have taken all reasonable care to ensure
that such is the case) the information contained in this document is in accordance with
the facts and does not omit anything likely to affect the import of such information”.
Note: In cases where the directors of the Issuer are responsible for part of the
prospectus, the directors of another company being responsible for the remainder, the
declaration should be appropriately adapted. Examples are a recommended take-over,
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an issue of guaranteed debt securities and an issue of convertible debt securities when
the Issuer of such securities is not the Issuer of the shares into which they are
convertible. In exceptional cases the Exchange may require other persons to give, or
join in, the declaration in which case the prospectus should also be modified
appropriately.
Where responsibility is accepted for part only of the prospectus, that part must be
indicated.
2.
1.8
In the case of a statement of report attributed to an expert, a statement that he has
given and has not withdrawn his written consent to the issue of the prospectus with the
statement included in the form and context in which it is included.
1.9
Names, addresses and qualifications of the auditors who have audited the Issuer’s
annual accounts in accordance with International Auditing Standards for the preceding
three financial years.
1.10
Names and addresses of the Issuer’s bankers whether as lenders, providers of credit
facilities, or guarantor of any indebtedness, the Issuer’s sponsoring member firm and
the solicitors to the Issuer.
THE SECURITES FOR WHICH APPLICATION IS BEING MADE
2.1
Statement that:
a)
“Application {has been} {will be} made to the Dar es Salaam Stock Exchange
for {the securities} to be officially listed.”
b)
Note: The relevant securities should be stated.
c)
“A copy of this prospectus has been delivered to the Authority for approval and
the Registrar of Companies for registration”.
d)
“The securities offered have not been approved or disapproved by the
Authority”.
e)
“Prospective investors should carefully consider the matters set forth under the
caption risk factors”, and include an indication.
f)
Whether or not all the securities have been sold or are available in whole or in
part to the public in conjunction with the application.
2.2
Other stock exchanges where admission to listing is being or will be sought.
2.3
Stock exchange (if any) on which securities of the same classes are already listed.
2.4
If securities of the same class have not yet been admitted to listing but are dealt in on
one or more other markets which are subject to regulation, are in regular operation and
are recognized and open, an indication of such markets.
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2.5
Details of the resolutions, authorizations and approvals by virtue of which the securities
have been or will be created and / or issued.
2.6
Nature and amount of the issue.
2.7
Number of securities which have been or will be created and/ or issued, if
predetermined.
2.8
Description of the shares for which admission is sought, and in particular the number of
shares and nominal value per share, or, in the absence of nominal value, the
accounting par value or the total nominal value, the exact designation or class, and
coupons attached.
2.9
Summary of the rights of the shares for which admission is sought, and in particular the
voting rights, entitlement to share in the profits, capital, pre-emptive rights to subscribe
to new issues of shares, creation or issue of further shares of equal priority with the
shares for which listing is applied for , redemption (where applicable), and., in the
event of liquidation, in any surplus, any other special rights and provisions with respect
to annual general meetings of shareholders and election and removal of directors.
Where there is or is to be more than one class of shares of the Issuer in issue, like
particulars must be given for each additional class.
2.10
Time limit (if any) after which entitlement to dividend lapses and an indication of the
party in whose favour the lapse operates.
2.11
Summary of the provisions of the Issuer’s memorandum and articles of association or
equivalent documents regarding changes in capital or variation of class rights whether
or not such provisions are more stringent than required by law.
2.12
Statement regarding tax on the income from the securities withheld at source in
Tanzania.
2.13
Indication as to whether the Issuer assumes responsibility for the withholding of tax at
source.
2.14
Arrangements for transfer of the securities and (where permitted) any restrictions on
their free transferability) e.g. provisions requiring transfer to be approved).
2.15
Fixed date(s) if any) on which entitlement to dividends arises.
2.16
Names and addresses of the Company Registrars and paying agents for the securities
who must be situated in Tanzania.
2.17
The following information concerning the terms and conditions of the issue and
marketing, public or private, of the securities in respect of which the application for
admission is made where such issue of marketing is being effected at the same time
as admission or has been effected within the 12 months preceding admission in the
case of shares or within 3 months in the case of debt securities.
a)
A statement of any right of pre-emption exercisable in respect of the
securities and of any disapplication of such right. Where applicable, a
159
statement of the reasons for the disapplication of such right; in such cases,
the directors’ justification of the issue piece, where the issue is for cash; and if
the disapplication of the right of pre-emption is intended to benefit specific
persons, a statement of such persons.
b)
Total amount of the public or private issue or marketing and the number of
securities offered, where applicable by category.
c)
If the public or private issue of marketing has been or is being made
simultaneously on the markets of two or more countries and if a tranche has
been or is being reserved for certain of these, an indication of any such
tranche.
d)
Issue price of offer or marketing price, stating the nominal value or, in its
absence, the accounting par value of the amount to be capitalized; the issue
premium and the amount of any expenses specifically charged to the
subscriber or purchaser; the methods of payment of the issue or offer price,
particularly as regards the paying -up of securities, which are not fully paid.
e)
Procedure for the exercise of any rights of pre-emption; the transferability of
subscription rights; the treatment of subscription rights not exercised.
f)
Period during which the issue or offer of securities (except in the case of
continuous issues of debt securities) will remain open after publication of the
prospectus, and the names of the receiving bankers.
g)
Methods of, and time limits for delivery of the securities and a statement
whether temporary documents of title will be issued.
h)
i)
Names, addresses and descriptions of the persons underwriting or
guaranteeing the issue for the Issuer.
ii)
Where not all of the issue is underwritten or guaranteed, a statement
of the portion not covered.
i)
Indication or estimate of the overall amount/ or of the amount per share, of the
charges relating to the issue payable by the Issuer, stating the total
remuneration of the financial intermediaries, including the underwriting
commission or margin, guarantee commission, placing commission or selling
agent’s commission (which must be separately disclosed).
j)
Estimated net cash proceeds accruing to the Issuer from the issue (except in
the case of continuos issues of debt securities) and intended application of
such proceeds including transient use of the proceeds.
2.18
Statement by the directors that in their opinion the working capital available to the
group is sufficient, or, if not, how it is proposed to provide the additional working capital
thought by the directors to be necessary.
2.19
The following information concerning admission of shares:
160
a)
if known, the dates on which the shares will be admitted to listing and on
which dealing will commence;
b)
indication of any of the following which have occurred during the last financial
year and the current financial year;
c)
public take –over offers by third parties in respect of the Issuer’s
shares,
ii)
public take-over offers by the Issuer in respect of other companies’
shares;
statement of the price or exchange terms attaching to such offers and the
outcome thereof.
2.20
If, in conjunction with the issue of shares, shares of the same or another class are
subscribed or sold privately, details must be given of the nature of such operations and
of the number and characteristics of the shares concerned.
2.21
Where the securities for which listing is sought are offered by way of rights or allotted
by way of capitalisation of reserved or undistributed profits to the holders of an existing
listed security, the pro rata entitlement, the last date on which transfers were or will be
accepted for registration for participation in the issue, how the securities rank for
dividend or interest, whether the securities rank pari passu with any existing listed
securities, the nature of the document of title, its proposed date of issue and the
treatment of any fractions must be stated, and
a)
b)
3
i)
in the case of a rights issue, how securities not taken up will be dealt with the
time, not being less than 21 days, in which the offer may be accepted; and
in the case of a capitalisation issue, whether or not the documents of titles are
renounceable.
GENERAL INFORMATION ABOUT THE ISSUER AND ITS CAPITAL
3.1
Amount of the authorised and issued capital and the amount of any capital agreed to
be issued, the number and classes of the shares of which it is composed with details of
their principal characteristics, including nominal value; if any art of issued capital is still
to be paid up, an indication of the issued capital is still to be paid up, an indication of
the number , or total nominal value, and the type of the securities not yet fully paid up,
broken down, where applicable, according to the extent to which they have been paid
up.
3.2
A legal opinion as to whether:
(a) the existing capital of the issuer and any proposed changes thereto is in
conformity with applicable laws and has received all necessary authorisations;
and
(b) any other material items with regards to the legal status of the Issuer and the
proposed issue.
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3.3
Where the Issuer has authorised but unissued capital or it committed to increase the
capital, an indication of:
(a) the amount of such authorised capital or capital increase and, where appropriate,
the duration of the authorisation;
(b) the categories of persons having preferential subscription rights for such additional
portions of capital;
(c) the terms and arrangements for the shares issue corresponding to such portions;
and
(d) whether the Issuer has any intention to issue additional shares of the class to be
listed within twelve months after initial listing.
3.4
If 10% or more of the voting capital of the Issuer (unclassified shares being regarded a
voting capital) will remain unissued (disregarding unissued shares reserved for issue
against exercise of subsisting conversion rights or options) a statement that (apart,
where applicable, from issues or proposed issues specified in the prospectus) no
material issue of shares (other than to shareholders pro rata to existing holdings) will
be made within one year without prior approval of the shareholders in general meeting.
3.5
a)
b)
Amount of any outstanding convertible debt securities.
Indication of the conditions governing and the procedures for conversion,
exchange or subscription of such securities.
3.6
*Summary of the operation during the three preceeding years which have changed the
amount of the issued capital of the Issuer and if material the capital of any member of
the group and /or the number and classes of shares of which it is composed, stating
whether issued for cash or other consideration which shall be described. Intra group
issues by wholly owned subsidiaries and pro rata issues by partly owned subsidiaries
may be disagreed. Such summary must also state the price and terms of such issues,
including particulars of any discounts or other special terms granted and (if not already
fully paid ) the dates when any installments are payable with the amount of all class or
installments in arrears. If there are no such issues, an appropriate negative statement
must be made.
3.7
Indication of the persons, so far as known to the Issuer, who directly or indirectly,
jointly or severally, exercise or could exercise control over the Issuer and particulars of
the proportion of the voting capital held.
Joint control means control exercised by two or more persons who have concluded an
agreement which may lead to their adopting a common policy in respect of the Issuer.
3.8
a)
Name of any person other than a director, so far as known to the I ssuer, who,
directly or indirectly, is interested in 5% or more of any class of the Issuer’s
capital carrying full voting rights, together with the amount of each such
persons’ interest or, if there are no such persons, an appropriate negative
statement.
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b)
Whether any such person has the intention to sell securities of the class or
classes the subject of the public distribution by the Issuer within a period of
one year after the conclusion of the public distribution.
3.9
If the Issuer is a member of a group, a brief description of the same and of the Issuer’s
position within it, stating, where the Issuer is a subsidiary, the names of and number of
shares in the Issuer held (directly or indirectly) by each holding company of the Issuer.
3.10
Number, book value and nominal value or, in the absence of a nominal value, the
accounting par value of any of its own shares which the Issuer or any subsidiary has
acquired and is holding, if such securities do not appear as a separate item in the
balance sheet.
3.11
Persons to whom any capital of any member of a group or of any of its subsidiaries
under option, or agreed conditionally or unconditionally to be put under option, with
particulars of the capital including the price and duration of the option and
consideration for which the option was or will be granted, or an appropriate negative
statement.
Where options have been granted or agreed to be granted to all the members or
debenture holders or to any class thereof or to employees under a share option
scheme, it will be sufficient, so far as the names are concerned, to record that fact
without giving names.
3.12
Where relevant, in absence of a statement that tax clearances as appropriate have
been obtained, a statement that appropriate indemnities have been given. (The
Exchange may require such indemnities to be supported by continuing guarantees).
3.13
A legal opinion setting out information on any legal or arbitration proceedings pending
or threatened against any member of the group which may have or have had during
the previous 12 months a significant effect on the group's financial position whether a
civil or criminal legal action or an appropriate negative statement.
3.14
Summary of the principal contents of each material contract (not being a contract
entered into in the ordinary course of business entered into by any member of the
group within the 2 years immediately preceding the publication of the prospectus,
including particulars of dates, parties, terms and conditions, any consideration passing
to or from the Issuer or any member of the group, unless they have been on view in the
last 2 years in which case it will be sufficient to refer to them collectively as being on
view.
3.15
A legal opinion as to whether any agreements or contracts with respect to the
proposed issue of securities including where applicable but not limited to underwriting
contracts, agreements or contracts with any securities exchange, company registrar
and trustees of bonds, debentures or other credit securities.
3.16
Statement that for a period(being not less than 14 days) at a named place in Dar es
Salaam (or such other centre as the Exchange may determine) as will as ( in the case
mentioned in item (iv) below) the registered office of the Issuer and the offices of its
163
paying agents in Tanzania, the following documents (or copies thereof), where
applicable, may be inspected:
4.
(i)
the memorandum and articles of association or equivalent documents of the
Issuer;
(ii)
any trust deed or other document constituting debt securities;
(iii)
each document mentioned in item 3.13, 6.4 and 8.10 or., in the case of a
contract not reduced into writing, a memorandum giving fully particulars
thereof;
(iv)
in the case of an issue of securities in connection with a merger, the division
of company, the transfer of all or part of an undertaking's assets and liabilities,
a take-over offer or as consideration for the transfer of assets other than cash,
the documents describing the terms and conditions of such operations,
together, where appropriate, with any opening balance sheet, whether or not
pro forma, if the Issuer has not prepared its own or consolidated annual
accounts (as appropriate);
(v)
all reports, letters, or other documents, balance sheets, valuations and
statements by any expert any part of which is extracted or referred to in the
prospectus;
(vi)
written statement signed by the auditors or accountants setting out the
adjustments made by them in arriving at the figures shown in any reports
included pursuant to section 5 below and giving the reasons therefor; and
(vii)
the accounts of the Issuer or, in the case of a group, the consolidated audited
accounts of the Issuer and its subsidiaries for each of the two financial years
preceding the publication of the prospectus together with all notes, reports or
information required by the Companies Ordinance.
THE ACTIVITIES OF THE ISSUER AND ITS GROUP
4.1
Description of principal activities, stating the main categories of products sold and/or
services performed.
4.2
In the case of a manufacturing enterprise, the availability of raw materials and the
extent of dependence on any single supplier.
4.3
The extent of dependence of the business activity upon a single customer or group
customers.
4.4
The seasonality, if any , of the business activity
4.5
Indication of any significant new product and/or activities.
164
4.6
Particulars of the acquisition or disposition of any material amount of assets otherwise
than in the ordinary courses of business and any material change in the mode of
conducting the business.
4.7
*Breakdown of net turnover during the past three financial years by categories of
activity and into geographical markets in so far as, taking account of the manner in
which the sale of products and the provision of services falling within the ordinary
activities are organized, such categories markets and methods of distribution differ
substantially from one another.
Alternatively, in the case of debt securities (other than convertible debt securities) the
total turnover only, covering each of the past two financial years.
4.8
In cases where two or more activities are carried on which are material, in terms of
profits or losses, assets employed or any other factor, such figures and explanation as
are necessary to demonstrate the relative importance of each such activity.
4.9
Location, size and tenure of the principal establishments (stating the rent and
unexpired term of any leaseholds) and summary information about land or buildings
owned or leased. Any establishment which accounts for more than 10% of net
turnover or production is to be considered a principal establishment.
4.10
Particulars of the Issuer's primary and equipment including cost, indication whether
such plant and equipment is expected to be replaced within two years after the
conclusion of the public distribution.
4.11
If required by the Exchange, a valuation of land buildings or plant shall be included.
4.12
Principal place of business (if any) in Tanzania
4.13
Where the information given pursuant to items 4.1 to 4.5 has been influenced by
exceptional factors, that fact should be mentioned.
4.14
Summary information regarding the extent to which the group is dependent, if at all, on
patents trademarks, licenses, franchises and concessions held, or on industrial,
commercial or financial contracts or new manufacturing processes, where such factors
are of fundamental importance to the group's business or profitability.
4.15
A legal opinion whether all licenses and consents required to perform the business or
proposed business of the Issuer have been duly obtained.
4.16
Information concerning policy on the research and development of new products and
processes over the past 3 financial years together with the status of the development
of products of services ( e.g. whether in the planning stage, whether prototypes exist,
the degree to which product design has progressed or whether further engineering is
necessary) and whether such development will require substantial investment and the
summary of research and development expenditures for the business, where
significant.
165
4.17
Information on any interruptions in the business which may have or have had a
significant effect on the financial position in the last 12 months.
4.18
Average numbers employed and changes therein over the past 3 financial years, if
such changes are material, with, if possible, a breakdown of persons employed by
main categories of activity.
4.19
Description, with figures, of the main investments made, including interests such as
shares, debt securities, etc., in other undertakings over the past 3 financial years and
during the current financial year.
4.20
Information concerning the principal investments* being made with the exception of
interests being acquired in other undertakings.
4.21
Geographical distribution of these investments (home and abroad).
4.22
Method of financing (internal or external)
4.23
Where the prospectus are prepared in respect of securities issued in connection with
any merger , division of a company take -over offer, acquisition of an undertaking's
assets and liabilities or transfer of assets:
a)
b)
a statement of the aggregate value of the consideration for the transaction and
how it was or is to be satisfied and;
if the total emoluments receivable by the directors of the issuer will be varied in
consequence of the transaction, full particulars of the variation; if there will be
no variation, a statement to the effect.
4.24
Information concerning the group's principal future investments * (if any), with the
exception of interests to be acquired in other undertakings on which the Issuer's
directors have already made firm commitments.
4.25
Any commitments for capital expenditure, the purpose of such commitments, the
anticipated source of funds needed to fulfil such commitments, the currency in which
such commitments are denominated and any measures that the Issuer plans to take to
hedge any resulting foreign currency exposure.
4.26
Any unusual or infrequent event or transactions or any significant economic changes
that affected the amount of reported income shown by the audited financial statements
that appear in the prospectus with emphasis on the last financial statements included
therein and a description of any other significant components of revenues or expenses
that, in the Issuer's judgment should be described in order for investors to understand
the Issuer's operational results.
4.27
An explanation of material increase or decrease in net sales or revenue shown by the
financial record set out in the prospectus and whether this is due to the introduction of
new products or services.
166
4.28
The impact of inflation and changing prices on the Issuer's net sales and revenues and
on operating income for the three most recent financial years of the Issuer or for such
shorter period in which the Issuer has been in business.
4.29
Note:
The word "investments" when used in items 4.19, 4.20 and 4.21 above, should be read
in a broad sense to include such investments as new plant, factories and research and
development.
5.
FINANCIAL INFORMATION CONCERNING THE ISSUER OR GROUP
5.1
Information with respect to the profits and losses, assets and liabilities, financial record
and position of the group in the form of an accountants' report for each of the last three
completed financial years (or such lesser period as may be acceptable to the
Exchange). The Exchange requires the financial information contained in prospectus to
comply with International Accounting Standards.
5.2
Where any member of the group was itself a listed company during the 12 months prior
to the publication of the prospectus, a comparative table of financial information as
mentioned in item 5.1 relating to that member may be provided instead of a report
together with a pro forma statement combining such information with the given in the
report mentioned above.
5.3
Statement that the annual accounts have been audited. If audit reports on the annual
accounts have been refused by the auditors or if they contain qualifications, such
refusal or such qualifications must be reproduced in full and the reasons given.
5.4
Indication of other information in the prospectus which has been audited by the
auditors.
5.5
If the Issuer prepared consolidated annual accounts only, it must include those
accounts in the prospectus in accordance with items 5.1 or 5.2 (as appropriate).
5.6
If the Issuer prepares both own and consolidated annual accounts, it must include both
sets of accounts in the prospectus in accordance with items 5.1 or 5.2 (as appropriate).
The Exchange may dispense with the requirement to include that Issuer's own
accounts if they do not provide any significant additional information to that in the
consolidated accounts.
5.7
Profit or loss per share of the Issuer (computed in accordance with International
Accounting Standards), arising out of the Issuer's ordinary activities, after tax, for each
of the last 3 financial years, where the Issuer includes its own annual accounts in the
prospectus.
5.8
Where the Issuer includes only consolidated annual accounts in the prospectus, it must
indicate the consolidated profit or loss per share for each of the last 3 financial years.
This information must appear in addition to that provided in accordance with the
167
preceding sub-paragraph where the Issuer also includes its own annual accounts in
the prospectus.
5.9
If, in the course of the above mentioned period of 3 financial years, the number of
shares in the Issuer has changed as a result, for example, of an increase in or
reduction or re-organization of capital, the profit or loss per share referred to in the first
and second sub-paragraphs above must be adjusted to make them comparable; in that
event the adjustment formulae used must be disclosed.
5.10
Amount of the dividend per share for each of the last 3 financial years, adjusted, if
necessary, to make it comparable in accordance with the third sub-paragraph of item
5.6.
5.11
Particulars of any arrangement under which future dividends are waived or agreed to
be waived.
5.12
Where more than 9 months have elapsed since the end of the financial year to which
the last published annual accounts relate, an interim financial statement covering at
least the first 6 months statement is unaudited, that fact must be stated.
5.13
Where the Issuer prepares consolidated annual accounts, the interim financial
statement must be a consolidated statement.
5.14
Statement of any significant change in the financial or trading position of the group
which has occurred since either the end of the last financial year for which annual
accounts have been published or the publication of the latest interim financial
statement, or an appropriate negative statement.
5.15
If the own annual or consolidated annual accounts do not give a true and fair view of
the assets and liabilities, financial position and profits or losses of the group, more
detailed and/or additional information must be given.
5.16
Note:
In the case of Issuer incorporated in a country under the law of which they are not
obliged to draw up their accounts so as to give a true and fair view, but which are
required to draw them up to an equivalent standard, the latter may be sufficient.
Reference must, however, be made to the Chief Executive.
5.17
Table showing the source and application of funds of the group over each of the past 3
financial years.
5.18
Individual details listed below relating to the undertakings in which the Issuer holds
(directly or indirectly) on a long term basis an interest in the capital likely to have a
significant effect on the assessment of its own assets and liabilities, financial position
or profits and losses.
5.19
(a)
The items of information listed must be given in any event for every
undertaking in which the Issuer has a qualifying capital interest, i.e if the book
value of that interest represents at least 10% of the capital and reserves of the
168
Issuer or if that interest accounts for at least 10% of the net profit or loss of the
Issuer (in the case of a group, comparison being made respectively with the
consolidated net assets and consolidated net profits of losses of the group):
(i) name and address of registered office;
(ii) field of activity;
(iii) proportion of capital held;
(iv) issued capital
(v) reserves;
(vi) profit or loss arising out of ordinary activities, after tax, for the last
financial year;
(vii) value at which the Issuer shows in its accounts the interest held;
(viii)
amount still to be paid up on shares held;
(ix) amount of dividends received in the course of the last financial year in
respect of shares held; and
(x) amount of the debts owed to and by the Issuer with regard to the
undertaking (not applicable to a listing of debt securities).
(c) The information required under items(e) and (f) above may be omitted where
the undertaking does not publish its annual accounts.
(d) The information required by items (v), (vi), (vii), (viii) and (ix) above may be
omitted if the annual accounts of the undertaking are consolidated into the
group annual accounts or, with the exception of item (ix), if the value
attributable to the interest is accounted for under the equity method in the
annual accounts, provided that the Issuer has satisfied the Exchange that the
omission of that information is not likely to mislead the public with regard to the
facts and circumstances, knowledge of which is essential for the assessment
of the security in question.
5.20
Name, registered office and proportion of capital held in respect of each undertaking
not falling to be disclosed under item 5.19 in which the Issuer holds at least 10% of the
capital. These details may be omitted when they are of negligible importance for the
purpose of enabling investors and their investment advisers to make an informed
assessment of the assets and liabilities, financial position, profits and losses and
prospects of the Issuer or group and of the rights attaching to the securities for which
application is made.
5.21
When the prospectus include consolidated annual accounts disclosure:
169
5.22
a)
of the consolidation principles applied (which must be described explicitly
where such principles are not consistent with the Companies Ordinance or
Statement of Standard Accounting Practice in use in Tanzania or International
Accounting Standards);
b)
of the names and registered offices of the undertakings included in the
consolidation, where that information is important for the purpose of assessing
the assets and liabilities, the financial position and the profits and losses of the
Issuer. It is sufficient to distinguish them by a symbol on the list of
undertakings of which details are required in item 5.19; and
c)
for each of the undertakings referred to in (b) either:
(i)
the amount of minority interests, if annual accounts are wholly
consolidated ; or
(ii)
the proportion of the consolidation calculated on the basis of interests,
if consolidation has been effected on a pro rata basis.
Indication as at the most recent practicable date (which must be stated) of the
following, on a consolidated basis if material:
a)
the total amount of any loan capital outstanding in any member of the group ,
and loan capital created but unissued, and term loans, distinguishing between
loans guaranteed, unguaranteed secured (whether the security is provided by
the Issuer or by third parties), and unsecured;
b)
the total amount of all other borrowings and indebtedness in the nature of
borrowing of the group, distinguishing between guaranteed, unguaranteed,
secure and unsecured borrowings and debts, including bank overdrafts,
liabilities under acceptances(other than normal trade bills) or acceptance
credits, hire purchase commitments and obligations under finance leases;
c)
all mortgages and charges of the group; and
d)
the total amount of any contingent liabilities or guarantees or the group.
An appropriate negative statement must be given, where relevant, in the absence of
any such loan capital, borrowings and indebtedness and contingent liabilities.
As a general rule, account should be taken of liabilities between undertakings within
the same group, a statement to that effect being made if necessary. The particulars of
indebtedness shall include rates of interest, basic repayment provisions and any
provisions which allow for the conversion of such debt into another class of securities
of the issuer.
170
6.
THE MANAGEMENT
6.1
a)
Names, home or business addresses and functions in the group of the
following persons and an indication of the principal activities performed by
them outside the group where these are significant with respect to the group :
(i)
Directors of the Issuer;
(ii)
Partners with unlimited liability, where the Issuer is a limited
partnership with a share capital ; and
(iii)
Founders, if the Issuer has been established for fewer than five years.
b)
Description of other relevant business interests and activities of every such
person and, if required by the Exchange, particulars of any former forenames
and surname, his nationality, if not Tanzanian, and his nationality of origin if his
present nationality is not his nationality of origin.
a)
A brief account of the business experience during the preceeding three years
of each director or person nominated to be a director including his principal
occupation in any company in which he was employed.
b)
Whether any director, executive officer, person nominated to become a
director or executive officer is or has been involved in any of the following
event:
(i)
such person or any partnership in which he was a partner or
any company of which he was an executive officer, is or has
been the subject of a filing of a petition under any bankruptcy
law; or
(ii)
such person has been convicted in a criminal proceeding or is
a named subject of a ruling of a court of competent jurisdiction
or any governmental body that permanently or temporarily
prohibited him from acting as an investment adviser or as a
director or employee of a broker or dealer, director or
employee of any financial institution or engaging in any type
of business practice or activity.
6.1
Full names and professional qualification (if any) of the secretary of the Issuer.
6.2
(a)
Aggregate of the remuneration paid and benefits in kind granted to the
directors of the Issuer by any member of the group during the last completed
financial year under any description whatsoever, and charged to overheads or
the profit appropriation accounts.
(b)
Particulars of any arrangement under which a director of the Issuer has agreed
to waive future emoluments together with particulars of waivers of such
emoluments which occurred during the past financial year.
171
(e) An estimate of the amounts payable to directors of the Issuer, including
proposed directors, by any member of the group for the current financial year
under the arrangements in force at the date of the prospectus.
6.3
Details of directors’ existing or proposed service contract with any member of the
group (excluding contracts expiring or determinable by the employing company without
payment of compensation (other than statutory compensation) within one year or an
appropriate negative statement.
6.4
All relevant particulars, including the consideration passing to or from any member of
the group, about the nature and extent of any interests of directors of the Issuer in
transactions which are or were unusual in their nature or conditions or significant to the
business of the group, and which:
a)
b)
were effected by the Issuer during the current or immediately preceding
financial year.
Were effected by the Issuer during an earlier financial year and remain in any
respect outstanding or unperformed; or an appropriate negative statement.
Such particulars must also be given in respect of such interests of any corporate
substantial shareholder who, directly or indirectly, is interested in 5% or more of any
class of the Issuer's capital carrying fully voting rights.
6.5
Interests (distinguishing between beneficial and non beneficial interest) of each
director, including his spouse and minor children whether or not held through another
party, in the share capital of the Issuer together with any options in respect of such
capital or an appropriate negative statement.
6.6
Material details of all options to purchase securities of the Issuer or any subsidiary or
holding company of the Issuer granted to be purchased or exercised by each director
within a one year period prior to the public distribution,
6.7
Total of any outstanding loans granted by any member of the group to the directors
and also any guarantees provided by any member of the group for their benefit.
6.8
Details of any schemes for involving the staff in the capital of any member of the group.
6.9
Summary of the provision of the articles of association or equivalent document of the
Issuer with regard to:
a)
b)
c)
d)
any power enabling a directors to vote on a proposal, arrangement, or contract
in which he is materially interested;
any power enabling the directors, in the absence of an independent quorum, to
vote remuneration (including pension or other benefits) to themselves or any
members or their body;
borrowing powers exercisable by the directors and how such borrowing
powers can be varied; and
retirement or non -retirement of directors under an age limit.
172
6.10
7.
Whether any director has the intention to sell any holdings in the same class of
securities to be issued by the Issuer in the public distribution within a period of one
year after the conclusion of the public distribution, stating the number or amount of
each class of securities.
THE RECENT DEVELOPMENT AND PROSPECTS OF THE GROUP
7.1
Unless otherwise agreed by the Exchange in exceptional circumstances:a)
b)
general information on the trend of the group's business since the end of the
financial year to which the last published annual accounts relate, in particular:
(i)
the most significant recent trends in production sales and stocks and
the state of the order book, competitive conditions and current or
prospective backlog of orders or assignments and
(ii)
recent trends in costs and selling prices;
information on the group's prospects for at least the current financial year.
Such information must relate to the financial and trading prospects of the
group together with any material information which may be relevant thereto,
including.
i)
All special trade factors or risks (if any ) which are not mentioned
elsewhere in the prospectus and which are unlikely to be known or
anticipated by the general public, and which could materially affect the
profits;
ii)
Any trends, demands commitments, events or uncertainties known to
the directors that shall result in or are reasonably likely to result in
material increase in the Issuer's liquidity ; and
iii)
Risks arising from any new venture, construction, licensing, potential
increased competition, regulation, dependence on key personality,
taxation, level of indebtedness, dilution or uncertainty or dividend.
7.2
Where a profit forecast appears in any prospectus, the principal assumptions, including
commercial assumptions, upon which the directors have based their profit forecast,
must be stated. The accounting policies and calculations for the forecast must be
examined and reported on by the reporting accountants and their report must be set
out. The sponsoring member must report in addition whether or not they have satisfied
themselves that the forecast has been stated by the directors after due and careful
enquiry, and such report must be set out.
7.3
The extent to which the Issuer's future operating results or financial conditions are
exposed to fluctuations in exchange rates or interest rates stating whether foreign
173
currency borrowings or commitments are denominated in foreign currency and where
the interest rate payable is not fixed in advance
174
APPENDIX 8
FORM OF CERTIFICATE BY THE SPONSORING MEMBER
We…………………………………………being a Licensed Dealing Member of the Dares Salaam Stock
Exchange Confirm that we have perused all the documents accompanying this Application and have
counter checked all stated facts and items of Information and are satisfied that on the basis of all
disclosed information , the applicant is suitable for listing of its securities at the Exchange.
Signed……………………………………………..Director
(by Member)
………………………………………………………Director/Secretary
Date……………………
175
APPENDIX 9
DAR ES SALAAM STOCK EXCHANGE
APPLICATION FOR A DECLARATION OF DEFAULT
NO……..........
Name of the Applicant: ...................................................................................
..............................................................................….
................................................................................…
Address:
.................................................................
.................................................................
.................................................................
Investment Held:
Security
No. of Shares/Bonds held
...............................................
...............................................
...............................................
...............................................
..........................................
..........................................
..........................................
..........................................
Default being declared: ...............................................................…………………
...............................................................…………………
...............................................................…………………
Defaulting LDM:
...............................................................………………….
...............................................................………………….
...............................................................………………….
I/We .................................................................. apply for the declaration of default to the DSE following
the failure by ................................................................ LDM to honour my/our claim(s).
..................................................
Signed
this day ..................................................
176
APPENDIX 10
DAR ES SALAAM STOCK EXCHANGE
APPLICATION FOR COMPENSATION
Name of the Applicant:
Address:
...................................................................................
..................................................................................
..................................................................................
.................................................................
.................................................................
.................................................................
Details of Compensation:
Total Claim:
Name of Security
No. of Shares/Bonds held
......................................
......................................
......................................
...........................................
...........................................
...........................................
..............................................................
Defaulting LDM: ................................................………..
I/We
..................................................
apply
for
the
compensation
of
TShs.
.............................................................
arising
from
the
failure
by
the
DDM ........................................................ to honour my/our claim(s). The application is based on the
Declaration of Default No. ............................. dated...................................
.............................................
Signed
.......................................
Date
Authorisation by the DSE:
Chief Executive Officer
Council Chairman
…............................................
………………………..
Date…………………………..
177
APPENDIX 11
APPLICATION TO DEPOSIT NON-LISTED SECURITIES AT THE
CENTRAL DEPOSITORY SYSTEM OF THE DAR ES SALAAM STOCK
EXCHANGE
……………………………………………………………………………….
(Name of Company)
hereby applies to deposit the following securities at the Central Depository System of the Dar es
Salaam Stock Exchange (hereinafter called “the CDS”);
………………………………………………………….……………………………….
14.
The Company was established in (country)
……………………………………………………………
Under (Law)
………………………………………on (date)…………………………………………….
Issued with incorporation certificate number (if any)
……………………………………………………
15.
Address of the registered office
………………………………………………………………………………………………………………
……………………………………………………………………………………………………...............
................................................................................................................................
16.
Address of each office at which a Shareholders’ Register is kept
………………………………………………………………………..
………………………………………………………………………..
………………………………………………………………………….
17.
AUTHORISED CAPITAL
(show separately the number and denomination of each class of shares)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
……………………………………………………………………………………………………………..
178
18.
ISSUED CAPITAL
(show separately any different classes of shares, the amount paid up on each class, and the
dividend and voting rights attaching to each class)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
6.
19.
Full list of shareholders and their holdings as at the date of application.
BUSINESS
(State the main business, the main products produced or service performed)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
………………………………………………………………………………………………
20.SUBSIDIARIES AND ASSOCIATES
(Give a list of all subsidiaries stating in each case, the name, nature of business and
percentage holding. Similar details should be provided for every other company in which the
company holds more than ten percent of the ordinary share capital).
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
…………………………………………………………………………
21.OFFICES
(List Directors and the Secretary)
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
………………………………………………………………………………………………
22.ACCOMPANYING DOCUMENTS
A)
Evidence of approval by the Capital Markets and Securities Authority to issue
securities to the public.
B)
Memorandum and Articles of Association and Certificate of incorporation.
C)
Letter of Undertaking.
179
D)
Application Fees and Annual CDS Fees.
E)
Business License
The Common Seal of the Company is hereunto affixed in the presence of:
Director
…………………………………………
Director/Secretary
………………………………………..
Date
……………………………………….
180
APPENDIX 12
LETTER OF UNDERTAKING TO COMPLY WITH CDS RULES OF THE
DAR ES SALAAM STOCK EXCHANGE
The Chief Executive Officer
Dar es Salaam Stock Exchange Limited,
P.O. Box 70081
DAR ES SALAAM
………………………………………………………………………………...
(Name of Company)
In consideration of the Dar es Salaam Stock Exchange (“the Exchange”) allowing the Company’s to
deposit non-listed securities described in the Company’s form of Application HEREBY UNDERTAKE
AND AGREE to comply with the continuing obligations of having the securities in the CDS of the
Exchange set out in the Annex to this Undertaking, as amended or supplemented from time to time by
the CDS Rules of the Exchange.
The above Undertaking has been signed by us;
As…………………………………………………………… (Director)
(NAME)
…………………………………………………………………
(Secretary)
(NAME)
Pursuant to authority granted to us by Resolution of the Board of Directors of the Company
on…………………………
Date
……………………
Signature………….Director
Date
……………………
Signature………….Secretary
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CONTINUING OBLIGATIONS OF HAVING NON-LISTED SECURITIES IN THE CDS OF THE DAR
ES SALAAM STOCK EXCHANGE
1.
The Company shall advise the CDS by written statement delivered by hand or Fax
transmission in accordance with the CDS procedures immediately a decision has been taken
on any of the following matters :a) Particulars of any of new capital whether to be issued as capitalization or by way of
rights to shareholders.
b) Any changes in the Directors, the Secretary, Auditors and Legal Advisors.
2.
The Company shall forward to the CDS as soon as issued 3 copies of all Resolutions
increasing the capital, changes to articles of association and all notices relating to further
issues of capital.
3.
The Company shall pay application fee prior to approval being granted in respect of every
application to deposit in the CDS shares issued as a result of a bonus, rights or other issues by
the Company.
4.
The Company agrees to pay an annual CDS fee as shall be laid down by the Council on 1 st
July, of every calendar year.
5.
The Company agrees to recognize and register only those transfers of the securities held in the
custody of the CDS where the transactions have gone through one of the Authorized CDS
Operators of the Dar es Salaam Stock Exchange.
6.
The Company agrees in relation to its issued securities held in the custody of the CDS: a) To maintain its register of shareholders in the CDS operated by the DSE in accordance
with the DSE Rules as maybe amended from time to time by the Council;
b) To provide the rights and benefits of shareholders in the Company, as set out in the
Memorandum and Articles of the Company to all those who are recorded in the Central
Depository System as the beneficial owners of shares in the Company.
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APPENDIX 13
CDS FEES
1.
INVESTORS
Type of Fee
Transaction Fees
2.
Amount
0.05% of the value of each
transaction subject to the minimum
amount of Tshs 1,000/=
CDS OPERATORS
Type of Fee
Amount
a) Application Fee for CDS Operators who are LDMs
b)
Application fee for CDS Operators who are not LDMs
Annual Subscription Fee for all CDS Operators
d) Change of CDS Operators, transfer of securities
between different accounts of the same Investor.
e) In respect of Ledger Balance Reports issued upon
request from the account holder
f) In respect of withdrawal of securities
c)
Tshs 200,000/=
Tshs 750,000/=
Tshs 200,000/=
Tshs 200/= per change
Tshs 5,000/= per Report
g)
Gifts, Donations and Release of Estates
Tshs 5,000/= per certificate
Tshs. 200 per transfer
h)
i)
Fee for recording, releasing or
foreclosing of pledges
Tshs10,000 per pledge
3.
LISTED COMPANIES
A Custody fee of 0.035% of the value of securities per annum.
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APPENDIX 14
CDS FORMS
184
APPENDIX 15
CDS AGREEMENTS
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APPENDIX 16
AGREEMENT FOR PROVISION OF ADVISORY SERVICES
(UNDER Rule 5.5(viii))
BETWEEN
…………………… …. of P.O Box …………, ……………………… (hereinafter referred to as “the
Issuer”) of the one part
AND
…………………………………….. of P.O Box ………, ……………………… (hereinafter referred to
as “the Nominated Advisor”) of the other part.
WHEREAS the Issuer is desirous of applying for listing of its securities at the Dar Es Salaam Stock
Exchange under the Enterprise Growth Market Segment (EGMs);
AND WHEREAS the Issuer shall be bound by the DSE Listing Rules which requires the Issuer to
appoint a Nominated Advisor.
AND WHEREAS the Nominated Advisor having assured the Issuer of its possession of a license
issued by the Capital markets and Securities Authority (CMSA) to practice as such;
AND WHEREAS the Issuer is willing to engage the services of the Nominated Advisor.
NOW THEREFORE, in consideration of payment of the necessary service fees the parties named
herein, hereby covenant and agree as follows:
1.
That the Issuer agrees and undertake to pay to the Nominated Advisor service fees mentioned in
the schedule attached herewith and forming part to this agreement.
2.
That the Nominated Advisor shall ascertain the readiness of the Issuer to issue securities and list
at the EGMs and appraise the CMSA and DSE of the fact.
3.
That the Nominated Advisor shall, either by himself or in consultation with other experts, appraise
the project for the purpose of seeking listing of the Company in the EGMs.
4.
That the Nominated Advisor shall certify/confirm to the CMSA and DSE that the Issuer is a viable
investment and that the pricing of its shares was objectively determined.
5.
That the Nominated Advisor shall remain and continue advising the Issuer as long as it is listed in
the EGMs.
6.
That the Nominated Advisor shall all the time have in place staff that are trained and qualified to
act in a corporate finance advisory role to Issuer.
7.
Nominated Advisor shall be accountable to CMSA under the terms of its licenses and to DSE
under its rules.
8.
THAT the parties undertake that in the event of any disputes arising out of or in connection with
this Agreement they shall always ensure that such disputes are resolved amicably.
186
9.
THAT in the event the dispute fails to the settled amicably the parties to this Agreement shall
resort to the Arbitration procedures prescribed under the DSE Rules and that such procedure
shall be applicable to any disputes between the Nominated Advisor and the Issuer.
10.
THAT the parties to this Agreement further agree that all claims, differences and disputes arising
out of or in relation to this Agreement if cannot be resolved amicably and having exhausted the
Arbitration process of the DSE shall be subject to the exclusive jurisdiction of the High Court of
Tanzania.
IN WITNESS WHEREOF the parties have caused these presents to be executed as of the day and
year first above written.
SIGNED and DELIVERED by the said Issuer
..........................................
Issuer's Representative
On this.........day of.................. 20........
Name: …………………………………..
Postal Address....................................
……………………….…
Qualification: .......................................
In the presence of (Witness):
Name:…………………………………
Signature: .........................................
Postal Address: ................................
………………………
Qualification: ....................................
SIGNED and DELIVERED by the said Nominated
Advisor
On this..........day of....................20........
Name: ……………………………………
Postal Address: ...................................
…………………………
Qualification: .................................. .....
In the presence of (Witness):
Name: ……………………………………
Signature: .............................................
Postal Address: ....................................
…………………………
Qualification: .........................................
187
..........................................
Nominated Advisor's Representative
APPENDIX 17
LETTER OF UNDERTAKING TO COMPLY WITH LISTING
REQUIREMENTS OF THE DAR ES SALAAM STOCK EXCHANGE BY
NOMINATED ADVISOR
Ref. No: ……………….
Date: ………….……..
The Chief Executice Officer,
Dar Es Salaam Stock Exchange,
P.O Box 70081,
Dar Es Salaam
RE:
LETTER OF UNDERTAKING TO COMPLY WITH LISTING REQUIREMENTS OF THE DAR
ES SALAAM STOCK EXCHANGE
We ……….…………………………. (“the Nominated Advisor”) in consideration of the Dar Es Salaam
Stock Exchange (“the Exchange”) granting the Issuer’s application for listing of securities described in
the Issuer’s Form of Application, HEREBY UNDERTAKE AND AGREE to make sure that the Issuer
comply with the Listing Rules of the Exchange as amended from time to time and continuing obligations
arising wherefrom.
We FURTHER UNDERTAKE AND AGREE to remain and continue advising the Issuer as long as it is
listed in the EGMs.
The above undertaking has been signed by us this …… day of …………………………. 20.…
Name: …………………………..….
Signature: ……………………….…
Qualification: ………………………
Name: …………………………..….
Signature: ……………………….…
Qualification: ………………………
188